Results from a Federal Reserve survey of senior bank loan officers indicated that lenders have held the line on prime lending standards and have raised standards for sub-prime and non-traditional home loans.
The recent meeting with the Federal Reserves Federal Open Market Committee reiterated its concern over the COVID-19 pandemic and its effect on the US economy and health of Americans. This article will explain in further detail.
In This Article:
- FOMC Minutes Suggest QE Tapering by Year-End
- FOMC Statement Commits to Using its Full Range of Tools to Ease Impact of Pandemic
- Mortgage Rates: Still Historically Low
Mortgage rates continue to hover near historic lows, which are expected to stay low for the foreseeable future.
FOMC Minutes Suggest QE Tapering by Year-End
Wednesday’s post-meeting statement of the Federal Reserve’s Federal Open Market Committee reaffirmed its concern over the coronavirus pandemic and its impact on the economy and health of all Americans. The Committee voted to hold its benchmark target federal funds range at 0.00 percent to 0.25 percent. Analysts do not expect the Fed to raise its key interest rate more than once in the next three years.
Federal Reserve Chair Jerome Powell said that the sharp increase in Covid-19 cases in mid-June kept the economy from recovering after the virus pandemic caused a historic plunge in the U.S. Gross Domestic Product during the second quarter.
Chair Powell described the resurgence of Covid-19 as “flattening the curve of the recovery,” and said that efforts taken to control the virus are “critical.” Restoring the economy to normalcy will require national responses designed to stop the rapid spread of the highly contagious virus.
Fed Chair Powell said the pandemic and its fallout caused the biggest shock to the U.S. economy in living memory.
FOMC Statement Commits to Using its Full Range of Tools to Ease Impact of Pandemic
The Federal Open Market Committee reasserted its commitment to using ”all available tools to support the U.S. economy during these challenging times.” The Committee’s monetary policy decisions are based on two legal mandates to achieve maximum employment and price stability.
Committee members said that although the economy has recovered since the initial coronavirus outbreak, economic readings remain far below their pre-pandemic levels. The Fed statement said that the path of economic recovery depends significantly on the course of the virus. The Fed expects the pandemic to severely impact the economy in the near term and to continue damaging the economy in its mid-term forecasts.
The Fed will continue to purchase Treasury bonds and mortgage-backed securities to support credit flow to businesses and households. The FOMC statement stressed the Committee’s flexibility in dealing with current and emerging economic conditions; members will review domestic and global financial conditions and will change monetary policy according to developments
Mortgage Rates: Still Historically Low
The Federal Reserve has decided to leave interest rates near zero as the economy continues to struggle to recover. The near future is still uncertain given the times we are currently in.
That said, mortgage interest rates also continue to be extremely low and have hit all-time lows a handful of times over recent weeks. This, as well as the easing of restrictions, is prompting the housing market across the nation to bounce back as buyers come out of the woodworks and take advantage of rock-bottom interest rates.
Now may be a very good time to take advantage of still historically low mortgage interest rates before they rise. If you have specific questions on purchasing or refinancing your home mortgage loan and how these changes may affect you, please contact your trusted mortgage professional today.
Looking to Apply For a Mortgage?
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