The Fed Leaves Rates Unchanged


It was widely expected that the FOMC would not make changes to the Fed Funds rate today…and that's what happened. 

Here are excerpts from the FOMC statement today:

"Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit…. Employers remain reluctant to add to payrolls. Housing starts are at a depressed level. Bank lending has continued to contract, but at a reduced rate in recent months…"

You can read the entire press release here.

If you have a home equity line of credit, your rates should be remaining the same (for now).   Other than loans attached to the prime rate, mortgage rates are not directly controlled by the Fed.  Mortgage rates, however, may be influenced by the actions of the FOMC.   Mortgage interest rates are based on bonds (like mortgage backed securities).  Investors reacting to the FOMC may impact mortgage rates.  Fellow mortgage blogger, Dan Green, has authored an excellent post: The Federal Reserve May *Influence* Mortgage Rates, But It Doesn't *Set* Them.

Mortgage rates remain at very low levels.  As the economy improves, we will see rates trend higher.  Inflation will also cause mortgage rates to rise. 

If you're a home owner (primary or investment) in Washington state, I highly recommend contacting your mortgage professional to see if refinancing today makes sense for you.   If you haven't heard from your mortgage originator in the past few months, it's possible they may no longer be originating as many have left industry.  I'm happy to adopt your mortgage and you as a client, regardless of if you refinance or not.

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