Egelin Property Group | Phone:(214) 790-4400 | Fax: 972-874-2107 | Email: megelin@kw.com

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Interesting Facts About The Fed Announcement!

The Federal Reserve Open Market Committee concluded its 2-day meeting today, and has delivered their announcement.  The anticipated 1/4% rate hike has occurred.  The initial reaction by the mortgage bond market is a bit of a sell-off, which is putting upward pressure on mortgage rates at this moment.  There will be volatility going forward, yet our fellow loan officer has the expectation that we will still have a chance at slightly lower mortgage rates as the market absorbs this move and things begin to settle down.

Keep in mind that the Fed does not control mortgage rates, just the Federal Funds Rate, which is the interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution overnight.  Obviously, the actions the Fed takes with the Federal Funds Rate ripples thru the economy and impacts everything so it will have “an effect” on mortgage rates.  Here’s the interesting thing, we actually expect to see some improvement in mortgage rates based on the Fed hike.  This reaction is historically based, and while it’s not a guaranty, the is compelling logic that this pattern will occur again.  Basically, when the Fed raises the Fed Funds Rate, this will put a dampening effect on the stock market because it makes borrowing costs higher.  Now, the stock market is in full surge, so we’ll see how much this modest rate increase will dampen things (or not).  Generally, when stocks get hurt, the mortgage rates improve.  This is our expectation.  Just know that there is going to be volatility, and this rate pattern will take some time to develop.  We’ll keep our fingers crossed for slightly better mortgage rates.  If we don’t get them, the silver lining will possibly be that people will jump off the fence and take action on a home purchase before mortgage rates continue higher.

Egelin Property Group has one of the best mortgage loan officers available to you.  Please contact us today at (214) 790-4400 so that we can get you in contact with our loan officer to discuss your best options when it comes to buying your dream home!!!

SOME HISTORY:

  • The graph below is a history of the Federal Funds Rate, as adjusted over time by the FOMC (Fed Open Market Committee)
  • Most recent Fed rate hike was Dec. 16, 2015.  This was the first hike they did since 2006.

 

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