Negative Interest Rate/Near-Zero Percent Rate

Today, everyone’s hearing about a possible, “Negative Interest Rate” or the “Near-Zero Percent Rate;” however, a lot of home buyers are wondering, What does this really mean?”

Really, it all starts with the Federal Reserve Board (The Fed), which is charged with developing monetary policy within the United States, which involves influencing interest rates and the availability of credit and money in the U.S. economy. Back in March, the Fed lowered the Policy Interest Rate  to near-zero, and on April 29, 2020, the Fed Chair, Jerome Powell, pledged to hold interest rates at near zero percent in support of the economy.

Can I Get a Zero Percent Interest Rate Loan?

No. However, the Policy Interest Rate, and other factors, influence the mortgage interest rates that lenders charge. This is why we are seeing mortgage rates at historic lows.

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What Mortgage Interest Rates Are Available for Borrowers, Right Now?

For week ending, May 14, 2020, the 30-year fixed-rate mortgage was averaging just 3.28% down from 4.07% a year ago, according to MarketWatch.Com. This is most likely why Realtor.Com reported on, May 7, 2020, that home loan applications have risen for the 3rd week in a row. This week-over-week increase, credited in large part to home buyers in California, could mean that people are taking advantage of low mortgage interest rates to shop for a home.

So, what about the Negative Interest Rate? Well, the Fed has the ability to lower the Policy Interest Rate to a negative number, below 1%. However, Fed Chair Powell has also made it abundantly clear that he is unwilling to tread into that territory as it could have a detrimental impact on the overall economy.

So, what does this all mean for you? It means that mortgage interest rates are at historic lows presenting a tremendous opportunity for home buyers.