at under 3% — instead of around 4.5%, which was the case two years ago. That kind of difference can mean hundreds of dollars in savings every month, tens of thousands of dollars over time.” data-reactid=”32″ type=”text”>As any borrower knows, mortgage rates are super-duper low in 2020. You can get a 30-year home loan at under 3% — instead of around 4.5%, which was the case two years ago. That kind of difference can mean hundreds of dollars in savings every month, tens of thousands of dollars over time.
seize an ultra-low rate while they can.” data-reactid=”33″ type=”text”>But now, the Federal Reserve and Chairman Jerome Powell have announced a policy that experts say could help bring an end to today’s deeply cheap mortgage rates. Homebuyers and homeowners may want to seize an ultra-low rate while they can.
The Fed has decided it won’t be bothered if inflation starts bubbling up.
What’s changing at the Fed?
The Fed pushed a key interest rate to next to nothing in March as the coronavirus started hammering away at the economy.
The Fed typically hikes interest rates to keep inflation under control — specifically to keep it from rising above 2% per year. But the central bank now says it’s going to be more chill if price increases go above that line, because inflation has been too limp for too long.
“We are certainly mindful that higher prices for essential items, such as food, gasoline and shelter, add to the burdens faced by many families, especially those struggling with lost jobs and incomes,” Powell said in a webcast speech. “However, inflation that is persistently too low can pose serious risks to the economy.”
The Fed also has concluded that holding down interest rates — even at the risk of stoking inflation — is good for jobs.
“The economy is always evolving,” Powell said. “Our revised statement reflects our appreciation for the benefits of a strong labor market, particularly for many in low- and moderate-income communities.”