Friday, March 27, 2020 - Article by: Mark Hemingway - Security Financial Services, LLC -
Due to the recently added liquidity actions by the New York Federal Reserve, the mortgage markets have stabilized a bit after several weeks of depressed prices for mortgage-backed securities. Mortgage rates edged lower with the 30-year fixed-rate mortgage declining to 3.50% this week from 3.65% last week with 0.7 in points and fees. Last year this time the rate was 4.06%. Rates should remain historically low for the foreseeable future due in part to a slowing global economy from the coronavirus fallout.
This morning Federal Reserve Chair Powell said we may well be in a recession right now but there is nothing wrong with the economy. Powell said people are being asked to step back from the economy due to the coronavirus. He went to say that he sees a solid economic rebound due to the fact that the economy was strong right before the virus hit. He also reiterated the Fed will do all it can to battle the current situation. As the saying goes "Don't fight the Fed."
The recent carnage that took place in the U.S. stock markets saw the Dow Jones Industrial Average fall 38% from February 12 close of 29,551 to this past Monday's low of 18,213. The plunge was touched off by the economic fallout from the coronavirus outbreak here in the U.S. Tuesday, Wednesday and Thursday have seen big gains as the Dow has recouped more than 4,000 points or 22% due to the virus stimulus package bill that is working its way to President Trump to be signed, possibly tomorrow. In addition, big QE measures enacted by the Fed are helping to soothe the financial markets.
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