By Carissa Abazia
The Fed Reserve cut its benchmark interest rate to zero on Sunday, the second such emergency rate cut this year in response to the coronavirus. We wish mortgage rates would be 0%! However mortgage rates don’t follow the Fed Rates.
Although the Fed funds rate is indirectly tied to mortgage rates, it’s a good bet that mortgage rates may fall even more in the days and weeks to come as investors flee to safe-haven asset classes, like the 10-year Treasury note, which typically moves with mortgage rates.
“The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,” the Fed said in a statement as it cut interest rates to near-zero and launched a $700 billion quantitative easing program to shelter the economy from the effects of the virus.
The Fed also slashed the rate of emergency lending at the discount window for banks by 125 bps to 0.25 percent, and extended the term of loans to 90 days.
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