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Fed Lowers Rate to 0%, What Does That Mean For Mortgage Rates?

You might have heard that the Fed has announced that they are lowering rates to 0%. So what does that mean for mortgage rates? Well first things first, the Fed’s rate isn’t the same as mortgage rates, so we do not get loans for 0%. What it does mean is that it could help…

The Fed has only a couple of tactics to help the economy. One of the biggest levers is the interest rates (the rate that it loans money to banks). The idea is simple: If they make it cheaper for banks to get money then banks can lend it out for cheaper. If rates on car and home loans go down people will go borrow money to buy cars and houses. If everyone is buying things, our economy will grow and we won’t go into/be in a recession.

Mortgages are one of the best ways for money to be put into the economy because there is buying homes is great for it and refinancing usually puts more money in your pocket so you could spend it to help the economy.

So here is what they Fed did: They lowered to zero. By the way, the rate was the same from 2010 to 2016. So when we think of this being so low and crazy, we need to remember that this was the norm for a while. So that will probably not have a huge effect on rates but it will help them stay low.

If you have a rate above 4.5% you should for sure looking into refinancing to save money on your monthly payment. If you are looking to buy or have thought about it in the past, this might be the time where your monthly payment is cheaper than your rent and it makes sense to buy. Reach out and we can help you look at how you could help build your legacy wealth now.

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