Fed Raises Funds Rate a Half Point

Today wrapped up the two-day FOMC meeting and Chairman Powell announced that the funds rate will be increased by a half point. As of today, the federal funds rate is 0.75-1% and is expected to another 2 percent by the end of the year.

From the FOMC statement:

“…the Committee decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent and anticipates that ongoing increases in the target range will be appropriate. In addition, the Committee expects to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities at a coming meeting.”

The Fed also reiterated their plan to continue weening back supporting lower mortgage interest rates.

Mortgage rates reacted favorably to this news. You can see on the chart that around 11:30 PST, the light blue spikes higher – this is indicating an improvement to mortgage-backed securities (which mortgage interest rates are based on). The reason for the improvement to mortgage rates while the Fed funds rate was moved higher is that this increase to the Fed Funds rate was highly anticipated.

So… what does the 0.500% increase to the Fed Funds rate mean to you?

If you have credit cards or a home equity line of credit or any other debts where the interest rate is based on the prime rate, your rates probably just went up a half point. And they probably will again when the Fed wraps up their June 15th meeting.

Although we had this nice improvement to rates today, mortgage rates are likely to continue to trend higher with the Fed continuing to pull back on their support and let’s not forget inflation, which also drives mortgages higher as bonds (like mortgage-backed securities) react negatively to inflation.

If you have a home equity line of credit or credit card debt, you may want to look at doing a cash-out refinance depending on what your personal scenario is.

If you are considering a home purchase, refinance or second mortgage for a home located anywhere in Washington state, I’m happy to help you!

Mortgage Rates on the Rise

Mortgage interest rates have been pushing higher with the Fed pulling out of buying mortgage-backed securities and inflation. Check out Freddie Mac’s latest Prime Mortgage Market Survey that was published this morning. NOTE: Rates posted below are EXPIRED – for current mortgage rates based on your personal scenario for homes located in Washington state, please click here.

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Fed Leaves Rates the Same BUT…

The Fed’s announcement today to leave the funds rate unchanged was not a surprise to the markets. What did send the bond market in a tizzy this afternoon was that the Fed ever-so-slightly moved the goal posts out a bit for inflation. [Read more…]

How does economic news impact mortgage interest rates?

Mortgage rates are based on bonds (mortgage backed securities) and are traded fairly similar as stocks. Investors tend to favor stocks over bonds as stocks tend to provide a better return. However, investors will opt for bonds over stocks when they are seeking safety when markets are tumultuous.  When the stock market is on a run, odds are mortgage rates may be moving higher as investors are selecting stocks over bonds. And when the stock market is tanking, mortgage rates tend to improve for the same reason. [Read more…]

How the Fed impacts Mortgage Rates [LIVE MORTGAGE RATE POST]

20140504_210758Today 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.

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LIVE POST: Will the Fed Impact Mortgage Rates?

20140504_210758I like writing a “live post” with updates throughout the day to attempt to illustrate how mortgage rates (or the pricing of mortgage rates) can fluctuate throughout the day.

Today the two day Fed meeting wraps up and we’ll learn if the Fed is going to raise the Fed Funds Rate. Following the announcement from the Fed (around 11:00 am PST), we will have commentary from Fed Chair Janet Yellen.  While the Fed doesn’t directly dictate what mortgage rates will be, their actions certainly influences mortgage interest rates.

Click here for a mortgage rate quote for your home in Washington.

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The Fed says…. [LIVE POST]

20140504_210758Today at around 11:00 am PST, the FOMC will wrap up their two day meeting and announce any changes to the Fed funds rate. Markets will react to the Fed statements regarding their views of our economy impacting their decisions on whether or not to raise the Fed funds rate. It is widely anticipated that there will be no change to the Fed funds rate today.

It’s not unusual to have the Fed meeting impact the direction of mortgage rates…so I thought I’d attempt a “live rate post” to illustrate how mortgage rates can change in a day. Mortgage rates have been trending higher this week. As of 7:52 am this morning, the 30 year fixed rate is higher by about 0.125% in rate or 0.752 in fee compared to what I quoted two days ago on Monday’s post.

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What the Fed Says and How It Impacts Mortgage Rates [LIVE POST]

I am going to attempt to write a “live post” today to illustrate how mortgage rates may change based on data that is released throughout the day and market reactions. Please keep in mind that despite my best efforts, sometimes a “live post” can be a bit challenging…we’ll give it a try!

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