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Why the interest rate is not that low, especially 15 yr fixed, ARM rate etc?
February 25th, 2020 3:37 PM
Since I have so many requests these days, I have the explanation below:

Bonds level was at the lowest level for the past 20 years. But we do not have lower rates?
Why? Because we do not have the following two key players this time( compared with 2008-2013):

1)QE(quantity Easing, Fed bought 50B bonds every month during the financial crisis).
 
2)Lower Fed Rates. Fed lowered the Fed Rates  to 0% to 0.25%. 

But today's Fed Rate is 1.75%.

So that means: We need to have Fed cut the rates in order to get lower rate.
Bonds will not help that much. Lender could not lose money to the loans. 
They have costs to borrower money.

And I think Fed Will lower the rates in the next a few years.

Posted in:General
Posted by Eric Fang on February 25th, 2020 3:37 PMPost a Comment

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