Today the FOMC increased the Fed Funds rate by a quarter point from 1 to 1.25%. This increase to the Funds Rate was highly anticipated by the markets. As long as the economy stays on it’s current path, the Fed anticipates it will begin to gradually reduce the Federal Reserve’s securities holdings by decreasing reinvestment of principal payments from agency debt and mortgage backed securites. The Fed has been manipulating mortgage rates for a very long time. As they begin to pull out of mortgage markets, this will most likely cause mortgage rates to trend higher.
The Fed’s increase of the Funds Rate will cause HELOC’s to nudge up 0.25% as HELOCs (home equity lines of credit) are attached to the Prime Rate. This increase will also impact other debts that are attached to Prime. The Prime Rate is based on the Fed Funds Rate.
Today, mortgage rates are still very low… in fact, they’re near seven month lows. If you’re considering buying or refinancing a home located anywhere in Washington state, I’m happy to help you. Click here for a no-hassle rate quote.
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