Today is “Fed Day” and it’s widely anticipated that we will see our first increase to the Fed Funds rate in years.
Fed Chair Janet Yellen is expected to announce an increase of 0.25% to the Fed Funds rate following the wrap up of today’s FOMC meeting around 11:00 PST.
Mortgage rates have been trending higher in anticipation of this increase. Let’s see how the Fed’s announcement influences the pricing of mortgage interest rates. Remember, mortgage rates are based on mortgage backed securities (bonds) and the Fed does not directly control mortgage rates.
As I write this post, 10:00 am on December 16, 2015, I’m quoting:
EDITORS NOTE: Rates quoted below are EXPIRED! Please click here if I can provide you with current rates for your home in Washington state.
10:00 am: 4.000% (apr 4.145%) priced with 0.992 points for a 30 year fixed conventional. This quote is 0.413 higher in points than what I quoted two days ago on Monday!
10:14 the Dow is up 15.83 at 17,540.
Stay tuned…this is a live rate post and I’ll be updating this after the Fed has made their rate decision announcement.
11:11 am: The Fed announced they are increasing the Fed Funds rates 0.25 – 0.50. This is the first rate increase in almost 10 years. From the press release:
“Given the economic outlook, and recognizing the time it takes for policy actions to affect future economic outcomes, the Committee decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent….
…The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.”
The Dow is up 71. No change to the mortgage rate quote I provided at 10:14 this morning as of yet.
We are waiting for Janet Yellen’s press conference, which will be happening within minutes. Wells Fargo has announced the prime rate is 3.5%. This may impact rates for people with home equity loans if their rates adjust based on the Prime Rate.
12:00 pm: Janet Yellen’s press conference is well underway…no change to mortgage rates as of yet.
12:19 pm: Dow up 173.
1:44 pm update: Dow up 244. Wall Street is happy with what they heard from the Fed today. No significant intraday price changes to mortgage rates.
Rates quoted above are based on a purchase in the greater Seattle – King County area with a sales price of $500,000, 20% down payment and a conventional loan amount of $400,000. The home buyers have excellent credit with credit scores of 740 or higher and the transaction is closing by January 22, 2016 or sooner.
Rates quoted are subject to credit approval and may change at any time. Payments quoted above do not include property taxes or insurance and are principal and interest only. This is just a small sample of the mortgage rates and programs that I have available. If you would like me to provide you with a mortgage rate quote for your home purchase or refinance on your home located anywhere in Washington state, please click here.
[…] exception to the 15 year, than what I quoted on last week’s mortgage rate post and slightly improved since the Fed announced the increase to the Fed Funds rate. As I write this post, 10:00 am on December 22, 2015, I’m […]