Possible Federal Reserve Rate Slash In 2020 Could Boost Business For Lenders
It's hard to imagine the Federal Reserve slashing rates with the number of rate hikes that were introduced in 2018. Experts believe that 2019 could see even more of these hikes but relief may come in 2020, according to a recent report.
“With equity markets rebounding from their recent lows, economic growth solid, and core inflation close to 2%, we still think the Fed will raise rates once more, either at the April/May or June meeting,” reported Capital Economics, according to HousingWire.
“Further ahead, however, we expect a sharp slowdown in economic growth will force the Fed to cut rates by 75bps in 2020.”
Buyers have been struggling to afford homes due to increasingly high rates, causing trouble for mortgage lenders in 2019. If rates were to drop in 2020, the housing sector could see a very strong increase in originations and revenue, according to the report.
"However, rate reductions are often an indicator of a struggling economy, which also means consumer spending could weaken," according to HousingWire.
"LendingTree Chief Economist Tendayi Kapfidze said the impact to mortgage lenders is hard to say because the short end of the curve won't tell you with consistency about the long end of the curve, which is what influences mortgage rates."
To learn more about these predictions regarding the Federal Reserve's plans to either increase or slash rates in the future, click on the image above.
