The Fed's new notes indicate low mortgage rates are here to stay
The Federal Reserve just confirmed it will keep doing its part so today's deeply cheap mortgage rates will stay that way.
Homebuyers should still have plenty of time to lock in a great rate, and homeowners will continue to find opportunities to refinance and slash their monthly payments.
Newly released notes — or "minutes" — from the Fed's late July meeting indicate Chairman Jerome Powell and his fellow policymakers aren't even ready to hint about when they might raise interest rates again.
The central bankers also want Congress to dole out more money to help Americans through the coronavirus pandemic.
Fed policies should keep holding mortgage rates down
When the virus first started pummeling the economy in March, the Fed dropped a key interest rate nearly to zero. The rate cut has helped push mortgage rates to the lowest levels in history.
Powell has said the central bank isn't "even thinking about thinking about raising rates" — and the minutes, which were released Wednesday afternoon, seem to make that clear.
Fed officials indicated earlier this summer that they might use an upcoming meeting to say something about when the next rate hike might come. Experts speculated that we could hear something in September.
But now, all the policymakers are willing to say is that more information would be a good idea "at some point."
The central bank's own forecasts have already implied that near-zero interest rates will still be a thing through 2022.
Here's another way the Fed is holding its thumb on mortgage rates: It's buying up larger quantities of Treasury bonds and mortgage-backed securities, which are bundles of home loans that trade like bonds.
The Fed's purchases are raising prices for those investments while pushing down their interest rates, including mortgage rates.
So if you're in the market for a mortgage and you're not seeing low rates, keep shopping around — by getting quotes from more lenders. Though mortgage rates have gone up in recent weeks, 30-year home loans are still widely available at under 3%.
Comparison shopping also is great for landing the lowest rate on homeowners insurance, so you can feel confident you're getting the coverage you need, without overpaying.
The Fed wants Congress to give Americans more cash
The minutes make clear that the Fed is doing what it's doing because it remains very concerned about how the coronavirus is squeezing the U.S. economy.
At their July meeting, policymakers "noted that the coronavirus pandemic was causing tremendous human and economic hardship across the United States and around the world," the notes say.
They also talked about how government relief money — including those $1,200 "stimulus checks" and $600 a week in extra benefits for the unemployed — helped the economy by keeping Americans spending.
But the bulked-up jobless benefits expired at the end of July, and there's been no deal to revive them.
The Fed says "additional fiscal aid would likely be important for supporting vulnerable families, and thus the economy more broadly, in the period ahead."
In other words, get your act together, Congress.
People who are out of work are now scrambling to make ends meet solely on state unemployment benefits, which can be rather stingy.
They're looking for ways to cut costs, like rolling their credit card balances into low-interest debt consolidation loans to reduce their monthly payments.
Or, they're trying to make money through side gigs, or are refinancing student loans to cut the cost of that debt.
Republicans and Democrats say they still want to come to an agreement on more aid. But the Fed says whether that actually happens is "uncertain."
