Sound Off: Will interest rates remain this low?

A: The Federal Reserve lowers interest rates in order to stimulate growth during a period of economic decline and uncertainty, which means that borrowing costs become cheaper.

Low interest rates are good for homeowners as it reduces their monthly mortgage payments. The interest rates are so low largely because the economy is so weak.

Interest rates are likely to stay low for years as the economy fights its way back from the coronavirus pandemic, according to Federal Reserve Chairman Jerome Powell. He was quoted as saying “We think that the economy’s going to need low interest rates, which support economic activity for an extended period of time — it will be measured in years. However long it takes, we’re going to be there — we’re not going to prematurely withdraw the support that we think the economy needs.”

It looks like buyers will have access to low rates for years to come. Perhaps not as low as they are now, but very low from a historical standpoint.

Kathleen Daly, Coldwell Banker, 4155196074, kdaly@ cbnorcal. com; Lisa Lange, Coldwell Banker, 4158477770, lisalange@ coldwellbanker. com.

A: While economists cannot predict a crisis of this magnitude, they can advise governments how to calibrate the macroeconomic indicators for a steady recovery. The Federal Reserve pledged to support the economic recovery and to hold the rates near zero until 2023.

That is a necessary measure until there is evidence of a lower unemployment rate and an inflation of at least 2%.

Last time when the Fed lifted the interest rates after holding them near zero for seven years was in 2015. That was a necessary intervention following the 2009 housing crisis.

In real estate, this translates into advantageous home loan interest rates below 3%. A slight increase in expected by the beginning of next year. Lawrence Yun, the National Association of Realtor’s chief economist, believes that mortgage rates will increase to 3% by the end of the year and 3.1% in 2021, but will remain stable in the next few years.

Alina Aeby, Compass, 4157444844, alina. aeby@ compass. com.

A: The Federal Reserve typically lowers interest rates in order to stimulate the economy.

When interest rates are low, larger purchases such as homes and cars are considered more affordable. People feel more comfortable purchasing these bigger ticket items because they have a very attractive, low interest rate until the loan is paid off.

Since the onset of COVID19 and the shelterinplace orders began in March, we have seen many people take advantage of these historically low rates and finance new home purchases or refinance their existing mortgages.

If you haven’t taken advantage of these low rates, I suggest you reach out to your lender and get the process started. You’ll be happy you did.

Matt Heafey, the Grubb Co., 510 5411754, heafey@ grubbco. com.