Will mortgage rates go to zero?
Mortgage interest rates will probably not go to zero percent.
The federal funds rate is the rate that bank pay to borrow money overnight.
According to Greg McBride, chief financial analyst at Bankrate, “ Even the government can’t borrow at zero percent. “The most creditworthy consumer carries a higher risk than the US Treasury, so you are going to pay at least a couple percentage points more than that.”
But with mortgage rates being at historic lows, there is increasing demand to take advantage of those.
Many people may still feel the need to buy or refinance now which will help keep the demand strong into the future.
The path ahead for the economy is uncertain which could hurt the housing market.
As the practice of social distancing goes on, a slowdown of consumer spending could eventually lead to lost jobs and lower incomes.
It will take some time before we know if the lower rates will be sufficient to sustain economic growth and how the Corona Virus will affect the housing market.
Should I rush to refinance or get a mortgage?
Probably not. Mortgage companies are inundated with applications especially to refinance.
You may not be seeing those low rates right now despite all the hype of over falling interest rates. Mortgage companies are marking up rates to give them a chance to work through the applications the received in the initial wave.
There are many things affecting the economy right now, but is seems that under the current conditions, mortgage rates should stay low for the balance of 2020.
Rates should level out once lenders get through the initial back log of applications. That will make a more opportune time to get in. There is no urgency to get on the refinancing bandwagon right now.