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Many Questions: The Fed Funds Rate vs. Mortgage Rate

 

The overall economy and actions by the Federal Reserve have an indirect impact on mortgage interest rates. This explanation below from themortgagereports.com is helpful:

The federal funds rate or “fed funds rate” is what banks charge to lend money to one another overnight, and it ultimately affects consumer borrowing, too. The fed funds rate plus 3% generally equals the “prime rate” — which is the basis for setting rates on consumer credit lines like auto loans, credit cards, and home equity loans. "Not all interest rates are in lock-step with the fed funds rate (mortgage rates are not, for example), but they are all influenced by it."

Mortgage interest rates are determined by many variables and are very difficult to forecast, especially with unprecedented events such as the Coronavirus. What is clear is that mortgage interest rates are extremely low and will likely stay low throughout the year. Let us know if you have any questions.

 
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The information provided in this email newsletter is for general guidance only, and does not constitute the provision of legal advice, tax and accounting advice, real estate investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional real estate, tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Home value estimate calculators provided herein are general estimations based on publicly available data and should not be used as a substitute for a professional appraisal. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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