The Federal Reserve came out with a strong statement this past week saying that the future of our economy depends on how well the coronavirus pandemic is controlled. Unfortunately, at this time, the United States leads the world in COVID-19 infections and deaths.
“The coronavirus outbreak is causing tremendous human and economic hardship,” the Fed statement said. “The path of the economy will depend significantly on the course of the virus.”
The United States just broke the 150,000 threshold for deaths from the virus. The U.S. has about 4.2% of the world’s population and has recorded 23% of COVID-19 fatalities. Brazil is next on the list at 88,529. This is all according to Johns Hopkins data.
The Federal Reserves says that there will be no change to the Fed Funds Rate. Economic activity and employment have picked up somewhat in recent months. The Fed will continued to purchase Mortgage-Backed and Treasury securities.
The data for the Q2 GDP came out a day after these comments and the number was the largest quarterly decline ever – coming in at -32.9%. This is all due to the shutdown of the economy in March and April. Weekly Jobless Claims also came in last week at 1.43M. Although this numbers were awful, the markets did not react as strongly as the numbers were already baked in.
The good news for homeowners and home buyers: Freddie Mac says that the average 30-year fixed-rate fell to 2.99% this week. This is a record low with 0.8 in points and fees. Mortgage rates continue to be attractive and will be for some time, most likely into the new year.
At this time, the way forward is “extraordinarily uncertain,” Fed Chairman Jerome Powell said. Powell has urged Congress to spend more to curb the pandemic and help Americans who lost jobs. The Fed will not raise rates and will continue to provide credit as the markets have stopped functioning.
When this crisis began, the Fed slashed its benchmark rate to near zero. They have pledged to keep it there to ensure economic growth as we find a way out of this pandemic and economic disaster.
“The committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals,” the statement said.
We will see how the next couple of months play out as cities start to take a step back from opening up their economies and pleading with people to wear masks. We hope to see a turn around soon as this cannot be sustained for much longer.
If you have questions about your current mortgage or are looking to buy property during this time, please reach out to us. We specialize in everything from conventional loans to private money loans. We can help you in any type of situation you are in.