Singletary

With a drop in the federal funds rate, I’m hearing from a lot of folks wondering if now is the time to refinance their home mortgage.

The average rate on a 30-year fixed mortgage hit an all-time low of 3.29% in the first week in March. But keep in mind that mortgage rates don’t necessarily track the Fed’s rate, according to Tendayi Kapfidze, chief economist for LendingTree.

“There is often a misconception that changes in the federal funds rate affect mortgage rates, but this is not the case,” Kapfidze said. “Rather, they are often influenced by the same factors, yet rarely to the same extent. At times, they even move in opposite directions.”

From 2015 to 2016, as the Fed increased its benchmark rate, mortgage rates actually fell, Kapfidze noted.

To his point, as refinance applications have recently been surging, the 30-year mortgage rate has been ticking up.

“The recent drop in mortgage rates inundated lenders with applications,” McBride said. “So there is a traffic jam to even get on the mortgage refinancing highway right now. A lot of the rates that lenders are posting are intended as a deterrent. There’s more demand than supply.”

But don’t panic that you’re missing out on the bottom. You don’t need to rush to refinance.

“The Fed can cut rates very easily, but they have a tough time taking that back later by raising rates,” McBride said. “The last time we saw

rates at this low level [in December 2008], they stayed there for seven years. The stage is set for mortgage rates to remain at really low levels throughout 2020.”

Pausing will also give you time to shop around. And don’t just focus on the rate -- compare the fees.

Not everyone is happy about the Fed rate cut.

The losers in an ultra-low interest rate environment are savers, many of whom are fleeing the jaw-dropping plunges of the stock market to the safe harbor of deposit accounts.

Another savings option

worth considering is a no-penalty certificate of deposit. With this type of CD, you can make an early withdrawal without paying a penalty fee.

Following the past years of extraordinary market gains, it may pain you to park money in a relatively low-yielding deposit account. But think of it as a place to preserve your principal should you need to tap it in an emergency. And Lord knows, these are dire times.

c/o The Washington Post, 1301 K St., N.W., Washington, D.C. 20071. Her email address is michelle.singletary@ washpost.com. Follow her on Twitter (@ SingletaryM) or Facebook (www.facebook. com/MichelleSingletary). Comments and questions are welcome, but due to the volume of mail, personal responses may not be possible. Please also note comments or questions may be used in a future column, with the writer’s name, unless a specific request to do otherwise is indicated.