Mortgage Watch

Mortgage Watch

Mortgage Rates this week are under some pressure as the Federal Reserve reiterated it’s 0% interest rate policy through 2023! As a result, I’ve had many clients calling to ask whether mortgage rates are 0% since the Fed just kept rates at 0%. People hear a headline on the news or a radio soundbite mentioning the words “Fed, rate, zero,” and then assume the Fed just made some change that dropped rates to zero percent. After all why would there be so many news headlines about it if the Fed merely kept its policy rate unchanged?

It’s a fair question in that sense, but understand that the Fed’s rate decision will always make the news, even if the rate is the same as it has been since March (and it is). As such, if mortgage rates weren’t 0% for the past 6 months, they wouldn’t be zero now. And in fact, they’ll never be zero simply because the Fed Funds Rate is zero. These are two entirely different rates that apply to vastly different amounts of time and types of transactions.

The Fed Funds Rates governs overnight transactions between large financial institutions. Mortgage rates govern–well… mortgages! The Fed actually buys mortgage-backed debt at the same price as the rest of the bond market. Those prices are currently yielding rates around 3% in terms of top tier 30yr fixed loans. In that sense, the Fed is indeed setting mortgage rates, just at the same levels as everyone else and without much change from the past few days.

By far and away the biggest factor for recent rate movement has been the recently announced adverse market fee. It caused rates to spike significantly in early August when it was first announced. Rates then recovered when it was delayed several weeks ago. And now that we’ve hit the time frame where lenders need to re-implement the fee, rates have spiked quickly, but only for those lenders. As such, rates are significantly worse for some lenders compared to last Friday while others are slightly better. Ultimately though, any lender making a loan for a conventional 30yr fixed refinance will have to account for this fee, and most of them will be doing that before the end of this month (a majority already have as of this week). Essex will begin implement this on 9-26-2020!


Keith Murphy Branch Manager – Essex Mortgage NMLS #330827

Direct: 714-309-1140


About the Author

Tim Morissette, also known in the community as Mr. Foothill Ranch, offers over 46 years of real estate experience which has given him an established reputation and unmatched market knowledge. He is joined by his wife, Michele and sons Matt and Jeff, as they continue to offer personal service with an emphasis on achieving his clients’ real estate goals.  This unique combination of traits has led to his proven track record of referral and repeat business. This can be witnessed by the trust of homeowners in Foothill Ranch where he has sold twice as many homes and represented three times more buyers than the next-leading real estate agent for the last 26 years.

As residents of Foothill Ranch since 1994, Tim and Michele are actively involved in the community by fundraising for Foothill Ranch Library, Make-a-Wish Foundation, Cancer Society, Homes for Habitat, Relay for Life, South County Outreach, and the local church and schools. Tim enjoys sponsoring community-wide garage sales, paper shredding and e-waste recycling event, an Easter egg hunt, & a Meet Santa Event.

Tim and Michele are dedicated to their family of four sons, daughter-in-laws, and grandchildren. As a family, they enjoy many outdoor activities which include camping, spearfishing, mountain climbing and exploring the miles of hiking and equestrian trails in Foothill Ranch and the Whiting Ranch Wilderness Park. Tim and his sons are also avid snowboarders and enjoy mountain biking and lobster diving. Family is a top priority in the Morissette household. They look forward to helping more families achieve their dreams of homeownership.