Even though the Federal Reserve will main keep the Fed Funds Rate at 0% for the next couple of years, and has been buying $120 Billion a month in securities ($40B in mortgage backed securities) trying to force the interest rates down to offset the economic issues created by the pandemic, rates have been trickling up as can be seen in the chart of the 10 year note.
Several elements are at work… 1) The quantity of bond borrowing is huge. More than what the Fed is buying. Basic supply and demand. 40% of all the currency in circulation has been created in the last 12 months. 2) The bond market is already adjusting for the perceived economic growth post Pandemic. 3) The new $1.9 Trillion stimulus package being pushed through Congress on top of the recently passed $900B is being seen by the market as an element that can be inflationary. 4) We’re a long ways from the Fed slowing their bond purchases, but that will happen before they contemplate increasing the Fed Funds Rate.5) As the refinance volume slows, lenders may lower rates on some programs (tighten their spreads) to maintain their company’s volume.
Historically the interest rates are still great. Rates are volatile, and can come down, especially if the stock market has a correction from it’s highs… but we may have seen the bottom of the rate cycle. It’s always worth checking with me on the rate status, and specific scenarios.
If you are in the Los Angeles area, have any questions or real estate sales or financing needs, feel free in contacting me
Ron Henderson GRI, SRES, SFR, RECS, CIAS
President/Broker
Multi Real Estate Services, Inc.
Gov’t Affairs Chair – California Association of Mortgage Professionals (2017-2018)
Chairman – OutWest Marketing Meeting (Real Estate Education)
BRE #00905793 NMLS #310358
www.mres.com
ronh@mres.com
Specialist in the Art of Real Estate Sales and Finance
Real Estate market, mortgage rates, Los Angeles, San Fernando Valley, Conejo Valley, Simi Valley, Woodland Hills, West Hills, Calabasas, Chatsworth
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