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I Want That 0% Interest Rate!

Randal Engelmann & Erik Gould

We are Randal Engelmann and Erik Gould, partners in providing exceptional customer service...

We are Randal Engelmann and Erik Gould, partners in providing exceptional customer service...

Apr 21 4 minutes read

What happens to mortgage rates when the Fed drops the rate to zero? There are a lot of factors that make up mortgage rates. We will discuss them here as well as a big take away so you can get the very lowest rate available! 


Randal:
So the Fed just slashed interest rates to zero. What does that mean for your mortgage?

Randal:
We certainly saw the Fed slash rates to zero a little bit ago and we've had a lot of calls from our clients saying how do we get that rate?

Randal:
So there's four things to really keep in mind when you're talking about mortgage rates and interest rates in general.

Erik:
The first thing to know is the Fed rate, which they dropped just recently to near 0%, that's actually their rate that they loan other banks. That affects short term lending. That's more like home equity lines, lines of credit. Unfortunately, it doesn't affect mortgage rates directly.

Randal:
Directly.

Erik:
However, there are a number of things that do affect that. First of all, mortgage rates go more off the 10 year treasury bond, which is bonds and right now in this unstable stock market, lot of people pulling money out of the stock market, putting it into treasury and so that's keeping that stable and that's helping keep rates low.

Erik:
With that, rates did drop also because the Fed did release billions of dollars into the economy to help keep it stimulated during these changing times.

Randal:
Quantitative easing.

Erik:
Those are big words.

Randal:
I had a practice that one.

Erik:
Quantitative easing, which actually did affect mortgage rates a bit and drop them down.

Randal:
We saw them come at almost three.

Erik:
Yeah, we saw almost had 3%. So with that, what happened then, there was a flood of refinancing, a flood of people trying to refinance and get new mortgages and things like that and a lot of the banks and systems were overwhelmed, so they actually raised rates because of volume to slow it down. S.

Randal:
Slow it down.

Erik:
So you know, value, other actions by the Fed to stimulate the economy. The bond market are things that affect it more. Thing to take to consider.

Randal:
The big takeaway here everybody is a have a good relationship with a mortgage lender.

Randal:
If you have that relationship with a mortgage lender and you see these fluctuation in rates and you see them pop down, you want to be on their radar because as soon as you are, or when you are and those rates pop down, you're going to be hearing from them or you're going to be calling them directly to say, "Get me refinanced. Get me locked in."

Erik:
You want to be ready to act.

Randal:
You don't want to be at the end of their line. You want to be at the beginning of that line because as refinances come in or as mortgages get locked, those rates could start to go up as volume goes up.

Randal:
So our preferred lender, Nathan Hartseil at Main Street Home Loans is certainly a person to be in contact with about these.

Erik:
We'll have as contacts here for you below, so feel free to reach out to him. If you have any other questions, reach out to us. We'll do our best to hook you up or get the answers that you need.

Randal:
Until next time, thanks for watching.

Both Erik&Randal:
And stay tuned and stay focused.

Randal:
Dropped their interest rates to zero. How do I get that rate? .

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