Mortgage interest rates going down March 2020-Go figure!
The Fed is going on a $700 billion bond-buying spree.
Why? Well… the goal is to lower interest rates
Understand more on this I reached out my loan expert Brian Lebars from Vintage home loans in Pleasanton. Here it what he had to say:
1. First of all, it is important to understand the Fed doesn’t control mortgage rates.
2. Mortgage rates are actually determined by the supply and demand for mortgage bonds in the bond market.
3. It’s a cause and effect scenario, when mortgage bond prices go up, mortgage rates go down. When mortgage bond prices go down, mortgage rates go up. For the last 2 weeks this has gone on creating a ‘roller-coaster effect, which has impacted the mortgage rates to fluctuate as much as .5%.
4. Why is this occurring, probably the main culprit for the volatility in bond prices is investors are unable to predict how much supply will hit the market in the coming weeks and months.
5. Another cause of this is China’s central bank and other central banks normally invest their surplus of dollars back into the US bond market.
6. Now that international trade is coming to a halt, there’s no more massive trade deficit.
7. Meaning central banks don’t have a surplus of dollars to reinvest back into the US.
8. Investors who normally would buy up massive amounts of US bonds do not have surplus cash to do so in the present economic environment.
9. What is the bottom line, expect volatility in mortgage rates to continue for the foreseeable near future!
For more information, please reach out directly to Brian Lebars. His contact information is listed below.
Warren Oberholser RE/MAX ACCORD DRE # 01861944 (925) 980-4603 firstname.lastname@example.org Brian LeBars MLO #239905 Vintage Home Loans An Equal Housing Lender CA Department of Real Estate License #01715112 & #02072832 Direct 925-708-5400 Fax: 925-889-5626 344 Division St., #100 Pleasanton, CA 94566
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