The Fed met this week and after adjourning, said they elected not to raise rates at this time. They also said future policy will be determined meeting by meeting. The language in their post meeting statement left many investors wondering if the increase will come in the December meeting.
For now, the Fed says that the economy has been improving moderately in the last six weeks and housing has improved. However, the pace of job gains has slowed and inflation is low. The concern is whether the improvement will slow down. The Fed wants to see additional improvements in the labor market and to see that inflation returns to about 2% in the near future. That may or may not happen in time for the December meeting.
They feel that inflation should be at about 2% for the US to have a healthy economy, but it has been running closer to 1% over the last year or two.
It's interesting to see that mortgage interest rates have been lower in the last 12 months since the Fed ended the third round of quantitative easing, designed to keep rates lower and stimulate the economy. Since then interest rates have been averaging around 4% for a 30 yr conventional mortgage. With the Fed's announcement today, we may see those rates start to creep up. With that thought in mind, remember that we never know for sure what interest rates will do – but rates today are great! It's a great time to think about buying that new home or refinancing your current home.
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants, Inc, An Equal Housing Lender, NMLS#150953 - Email - Website