Coronavirus

Coronavirus – a new risk to the economy

The minutes from the Federal Reserve Jan. 28 – 29 meeting officially called coronavirus a “new risk” to the economy.

“The threat of the coronavirus, in addition to its human toll, had emerged as a new risk to the global growth outlook, which participants agreed warranted close watching,” the minutes said.

The Federal Reserve reiterated the current strategy with no plan to cut rates in 2020. Therefore they may reassess depending on market conditions.

The Federal Reserves does not directly control mortgage rates.  Their decisions and comments can heavily influence bond investors who do. Additionally, rates may be impacted by daily unexpected events, some of which may be global. If an investor sees potential large-scale uncertainty such as the Coronavirus, they may put their money in bonds and accept a lower guaranteed yield instead of stocks, with lower mortgage rates as a result.

Almost 75,000 cases of Coronavirus have been reported and over 2,000 have died worldwide according to the World Health Organization. The main infected area is Hubei province, China. China as of today represents ~ 17% of the world’s GDP.

“The question for us really is: What will be the effects on the U.S. economy? Will they be persistent, will they be material?” Fed Chairman Jerome Powell said in congressional testimony last week. “We know that there will be some effects on the United States.”

What we know now is mortgage rates are at 3-year lows per Freddie Mac. It’s a great time to leverage low rates to increase purchasing power. It and excellent time for homeowners to refinance to a lower mortgage rate or cash-out refinance to pay off debt or get cash for home projects.

 

Jon Lam, Mortgage Broker

NMLS #1385176

Emory Financial - A Mortgage Brokerage Company

2920 Huntington Dr. Suite 100

San Marino, CA 91108

 

 

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Mortgage Company in San Marino

Emory Financial
2920 Huntington Dr, Ste 100,
Effective eMarketing San Marino, CA 93063l
805-823-5119
[email protected]
www.emoryfinancial.com

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