As of March 15th, 2020 , the Federal Reserve slashed interest rates a full percentage, down to the range 0% – 0.25% with the intention of preventing a market crash similar to the 2008 Financial crisis. Back in March 3rd of this year, a similar action of dropping the interest rates down one point was performed, but with the feds repeating the cut, it shows that it’s possible that the US Economy machine could’ve crashed if any more waiting was done.
The Coronavirus is being treated like a dangerous pandemic resulting in people rushing around and clearing shelves at retail stores. Self quarantine is being performed, and for the first time in 11 years, investors are concerned that through people locking themselves at home, the market could come at a screeching halt. As seen in some industries, small businesses are closing down during this crisis, major companies are shutting down factories and producing at a slower rate (i.e. Cannon producing their cameras at 25% the usual rate due to closing factories). As soon as people stock up, the odds of them spending are slim to none.
The federal reserve isn’t stopping there though. The Fed also said they would purchase $700 billion worth of treasury bonds over the next couple of months; $500 billion in Treasury notes and $200 billion mortgage backed securities to protect Treasury Bond markets and credit lines for businesses and households.
Now is the time to buy a home. Interest rates won’t stay this low forever. The Fed reduced interest rates for banks who borrow from it’s window to contribute with this low interest rate for mortgages. Despite the present economic challenges established by the coronavirus, “banks have strong levels of capital and liquidity and are well positioned to provide credit to households and businesses.” (Federal Reserve Chairman Jerome Powell).
Don’t wait out. For more information on the Merced County Real Estate Market, call your local professionals at 209.975.SOLD or email info(at)soldavi(dotted)com.