Many people are asking how is the Fed's cutting rate to zero affect the mortgage rate for 30 years.
"A Fed rate cut changes the short-term lending rate, but most fixed-rate mortgages are based on long-term rates, which do not fluctuate as much as short-term rates. Generally speaking, when the Fed issues a rate cut, adjustable-rate mortgage (ARM) payments will decrease.
It will likely keep the mortgage rate to below 4% and pave the way for below 3%. This in turn will give more incentive for buyers to buy their dream homes. Already the mortgage rate is at historic lows and already many home owners were busy with refinancing in the 1st quarter of 2020. Now that the interest rate is expected to stay below 4% some buyers may be more interested to make that final decision to purchase. However due to the recent virus impact on economy and people daily activity, it will also put some resistance to the housing market. People are worried about getting the COVID-19 will keep their activity to the minimum and that will make the days on the market of the listings to be longer. People who are still out to see open houses are for sure serious about finding one so it also filters out some of those just-looking type of buyers.
Again in a difficult time, and a shifting market, any reduction in the interest rate will help out the buyers and the housing market in one way or another.
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