BIRMINGHAM, Ala. (WBRC) - In response to the coronavirus outbreak, the federal government lowered interest rates to 0% causing many homeowners to take advantage by refinancing their homes.
However, mortgage loan officer Steven Hester with Supreme Lending Southeast Region said the federal interest rate does not have a direct correlation with mortgage rates.
“The feds cut rates down to 0%. The fed rates heavily influence home equity lines, credit cards, auto loans...” said Hester.
Instead, mortgage rates are influenced by the 10-year Treasury note.
“The national average for Rates today is 4%,” Hester said. “The reason for that is eventually the market is going to increase once the virus is contained and lenders do not want to have all of these mortgages that have a low interest rate because it would make it a whole lot harder to sell on the secondary market which stops cash flow.”
The 10-year Treasury note is a loan to the U.S. federal government. The Treasury note matures in 10 years and is backed by the U.S economy.
Hester said it’s not a terrible time to refinance your home - just research to find the best rates.