Quick Interest Rate Update

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Did the Feds lower interest rates? Interest rates moved down this month, as I wrote that they were projected to do in my article from November 28th.  (The analysts were right this time!)

How far down?  It depends on your circumstances and goals, but in general rates have fallen about 0.500% from their 2018 highs.  Today the Feds announced that they would not only hold short-term interest rates steady, but also that they were considering curtailing the sale of their holdings of treasury bonds and mortgage-backed securities.

What does that mean and why is it important?  During the recession, the Federal Reserve bought trillions of dollars (not a typo) of U.S. Treasury Bonds and Mortgage-Backed Securities to flush money into the economy.  It worked, and helped build the longest economic expansion in U.S. history.

However, then they were stuck with trillions of dollars of investment holdings that they were never designed to hold, so they had to sell them off.  But if they sold them all off at once, they would crash the market.  So, instead, they’ve been selling the off slowly.

With the economy clearly slowing and the real estate market especially slowing down, they are thinking about slowing down the sale of these assets.  This will mean there will be fewer T-Bills and Mortgage-Backed Securities on the market, thus driving their price up and yields (interest rates) down.

See where I’m going with this?  We’ve seen significant improvement, but most analysts don’t think there is room for a lot more.  However, as I’ve written before, interest rates love stability, and the Feds just provided it.

Thinking of buying or refinancing?  Think now.  (And call now.)

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And, if you want to learn more about what you’re doing before you leap, please check out my upcoming classes here.  Knowing what you’re doing can help you save tens, or even hundreds of thousands of dollars over your lifetime on financing costs.

Casey Fleming, Author The Loan Guide: How to Get the Best Possible Mortgage (On Amazon)

Mortgage Advisor, C2 FINANCIAL CORPORATION

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This article represents the opinions of Casey Fleming, and not necessarily those of C2 Financial Corp.  This analysis was prepared with the best information available at the time it was written.  Neither Casey Fleming, nor C2 Financial Corp., have any magical insider information about bond markets, real estate markets or mortgage markets that would make economic projections any more reliable than any other source.  No warranty is made that the outcome will reflect the projections in this article, and neither Casey Fleming nor C2 Financial Corp. are responsible for decisions that you make regarding your own choices about your real estate or mortgage or those of your clients.

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