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  • Tel: (651) 552-3681
    Email: joe@joemetzler.com

  • No, mortgage interest rates are not zero

  • Minneapolis, MN: The news is screaming FED LOWERED INTEREST RATES TO ZERO in response to the COVID-19 virus outbreak.

    That sounds great, but it is extremely important that consumers read and understand that THE FED DID NOT JUST CUT YOUR MORTGAGE RATES.

    That is not how mortgage interest rates works.

    The Fed action is just ONE piece of a very large pie that makes up mortgage rates, and their actions have NO direct relationship to long-term mortgage rates. The Fed only controls the rate that very large institutions get charged when they borrow money, so if you are a large bank, go for it.

    For the rest of us, what what will the Fed rate cuts do?

    It will help prevent Mortgage Backed Security Bonds (which is where fixed rates mortgages come from) spreads from widening further to Treasury yields. It will help keep mortgage rates in a happier zone under 4%. It will pave the way to a return to low 3% in the coming weeks.

    Many other things are affecting interest rates these days, the biggest one being fear. Here is a graph of mortgage rate movement the past three months, and you can view current averages at JoeMetzler.com/rates

    Dark Blue 30-yr fixed
    Purple FHA 30-yr fixed
    Light Blue Jumbo 30-yr fixed

    Mortgage rates March 2020

    Due to current conditions, lender pricing is erratic and unpredictable.

    Mortgage rates are not likely to fall back immediately, but will likely come down again sometime in the future. Consider locking your loan if you are OK with rates right this moment, especially on any short-term windows before a purchase closing.

    If you are looking to refinance and have a little time, I am advising all me clients to get their applications in, as we project low rates will return sometime later this year, allowing you to get some ob the best interest rates ever.

    Hope I’m right, and only time will tell. be safe everyone.

    Equal Housing Lender. NMLS 274132