10:15 am: As I begin this post, we are about 45 minutes from knowing if the Fed is going to “pause” on hiking the fed funds rate, or if the hikes will continue.
Typically, mortgage rates would be improved right now already factoring in the pause, which would indicate that inflation is taming. Inflation retreating is good news for mortgage interest rates since mortgage rates are based on bonds (mortgage-backed securities). Right now (10:17 PST), MBS for 30 year 5% are down about 10bps.
Although the Fed doesn’t directly control mortgage interest rates, their actions certainly influence the direction of mortgage interest rates.
Stay tuned as I will continue to update this post throughout the day!
11:03 am: No changes to the funds rate at this meeting. From the press release:
“The Committee remains highly attentive to inflation risks.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 5 to 5-1/4 percent. Holding the target range steady at this meeting allows the Committee to assess additional information and its implications for monetary policy….. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective.”
Mortgage-backed securities are currently deteriorating and are down about 25bps.
Next up is the press conference in about 20 minutes.
Watching the press conference. Future rate increases are not off the table for the remainder of the year. The committee is considering another half point increase by the end of this year.
NOTE: The fed funds rate does not directly impacts mortgage rates but it DOES impact credit cards, home equity loans and any debts that are attached to the prime rate.
Lenders have been re-pricing for the worst following the meeting and press conference.
And now we’re receiving a price improvement! LOL…
July 26th is when the next FOMC rate announcement is scheduled to take place.
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