Mortgage Rates And Recent FED News

Dated: 12/22/2015

Views: 1270

In economic news, the FEDERAL RESERVE did decide to raise the benchmark “Federal Funds Rate” at the conclusion of their long-anticipated December meeting last week.  Most of the entire market was expecting this……….even despite it being the first time the FED has raised this rate since 2006. So in reality, it was a rather unprecedented move given they haven’t previously "DARED" to do so in the last 9 years. Interestingly, overall mortgage rates really have not changed much since the Fed announcement. So it just goes to show, you can never predict what the market will do.  At the same time, this is also because of the fact that the Federal Funds Rate that the FED controls is not DIRECTLY tied to most long-term mortgages. There’s absolutely a tie/correlation, but it’s just not a direct 1-for-1 relation. The Fed Funds Rate is actually more tied to “ARM” loans and definitely to Home Equity loans.  So I think the market’s long anticipation and expectation of this FED move kept markets from overreacting to the news too much. This isn’t to say rates still couldn’t take a quick spike upward at any time. And it’s still pretty much a given that mortgage rates in the long-term will at some point definitely rise more since the government will eventually stop its reinvesting/purchasing of Mortgage-Backed Securities (which they only did to stabilize the economy back during the market collapse of 2008-9 and has been 'falsely' keeping mortgage rates low ever since) and turn back over the liquidity of the mortgage markets to all the commercial banks.  

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Jon Maguire

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Greg Sanders

Greg Sanders is the CEO of The Sanders Team Real Estate. Greg has over 15 years experience technology, digital marketing, and operations. In addition to his real estate experience, Greg also serv....

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