The Federal Open Market Committee (FOMC) worked last weekend and announced a full 1% rate cut ahead of its regularly scheduled meeting. The statement announcing the cut said, “The Federal Reserve is prepared to use its full range of tools to support the flow of credit to households and businesses and thereby promote its maximum employment and price stability goals."
In other moves to attempt to mitigate the economic impact of the coronavirus outbreak, the Federal Reserve Board established a Commercial Paper Funding Facility (CPFF) to support the flow of credit to households and businesses during the nationwide response. The statement regarding the CPFF action said, "An improved commercial paper market will enhance the ability of businesses to maintain employment and investment as the nation deals with the coronavirus outbreak."
Rates for a 30-year fixed rate mortgage (FRM) trended up slightly for the week ending March 12 according to Freddie Mac's Primary Mortgage Market Survey. Though rates moved up from the previous week's all-time low, Freddie Mac said, "…many homeowners are smartly weighing their options to refinance, potentially saving themselves money."
With the exception of the Great Recession of the late 00s, the housing market has traditionally helped boost the U.S. economy and played a significant role in recovery. Seattle-based brokerage Redfin offered affordability perspective in the current interest rate environment in a recent release, saying "… a homebuyer with a $2,500 monthly mortgage budget can afford a home that is [approximately] $51,250 more at [current rates] than they could have one year ago." Redfin Chief Economist Daryl Fairweather added, "Low interest rates won’t help with direct impacts of the coronavirus on the economy like declines in tourism and service sector spending, but they will mitigate impacts to housing.”
Sources: Board of Governors of the Federal Reserve System, Freddie Mac, Redfin
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