This was the 10th straight interest rate hike from the Fed and was expected. However, this may be the last increase this year. This doesn’t mean mortgage rates will increase. Actually the bond market liked the comments from the Fed Chairman and has been rallying all day. Let’s hope this continues! When the Fed raises rates, it affects the rates that banks borrow money overnight. This also affects credit cards, home equity loans and car loans.
Many think that when the Fed raises their rates, it immediately affects long term mortgage rates. However the bond market always is looking to the future, they already had priced in a .25 point increase and the only thing they were watching for was the comments in the Fed Chairman’s speech this afternoon. The comments from Fed Chairman Powell conveyed the possibility that this was the last rate hike for a long time. They are watching economic data and still want to see inflation decrease.
The Fed is also expecting a mild recession later this year based on what they are hearing from Fed economists. Usually with a recession we see mortgage rates drop. The bond market is expecting the Fed to start dropping rates this fall, maybe sooner. All of this could help us see lower mortgage rates.
Long term we may see rates back in the mid 4’s but it may be a year before we see that. So at this point, with home prices not expected to decrease, it makes more sense to buy now and refinance if/when rates drop!
Leslie Vanderwerf, NMLS ID#335509, CrossCountry Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website
