It’s FED Day! [Live post]

Around 11:00 PST today, the FOMC (Federal Open Market Committee aka The Fed) will wrap up their two-day meeting with an announcement on any adjustments they are making to the federal funds rate. Although the Fed does not directly control mortgage interest rates*, the changes to the funds rate and the Fed’s commentary influences the direction of mortgage interest rates. Mortgage rates are based on bonds (mortgage-backed securities or MBS) and are traded, just like other types of bonds. Markets will react to the Fed’s actions and this will impact mortgage rates. Commentary or signs that inflation is not getting into check will push mortgage rates higher and indications that inflation is taming and that the Fed will lower the funds rate soon will help lower mortgage interest rates.

*Home equity lines of credit (HELOCs)with an adjustable rate that follows the prime rate, are impacted when the Fed adjusts the funds rate as the prime rate follows the Fed funds rate. As do other debts attached to prime, like credit cards and some car loans.

Earlier this morning, the ADP Employment report was released adding more jobs than expected.

I will be updating this post throughout the day… stay tuned!

11:02 am. No surprise – the Fed is not making any changes to the funds rate.  From the FOMC statement:

The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. Beginning in June, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion. The Committee will maintain the monthly redemption cap on agency debt and agency mortgage‑backed securities at $35 billion and will reinvest any principal payments in excess of this cap into Treasury securities. The Committee is strongly committed to returning inflation to its 2 percent objective.

Mortgage rates (right now) are unchanged. MBS are improved slightly.

Next up is Fed Chair Powell’s press conference at 11:30 am PST.

12:01 pm. MBS up just over 50 basis points. We could be seeing a reprice for the better from lenders (in other words, lower mortgage rates). 😎

2:00 pm. Mortgage rates (based on a sample I’ve been referring to) are about 0.125% better in rate or 0.25 better in points/fee than where we started this post this morning.

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