Three Things to Know about the Fed’s Rate Decision

Three Things to Know about the Fed’s Rate Decision

The Federal Reserve just increased the Fed Funds rate .75%. What does that mean, and how does it impact the mortgage market? Here are three things to know about today’s news:

1. The Federal Reserve Influences Mortgage Rates, They Do Not Set Them

Many have the misconception that the Federal Reserve’s actions have a direct impact on mortgage rates. Many assume that if a mortgage was offered 6% this morning, it’s now 6.75% after this afternoon’s announcement. That isn’t the case, however. The Federal Reserve sets the rates banks charge each other, not the rates lenders offer borrowers. The Fed’s actions influence the overall rate environment; it doesn’t set those rates.

2. The Federal Reserve is Trying to Ease Inflation

The Federal Reserve is heavily-focused on easing inflation in the US economy. They are trying to be aggressive in their actions to stop inflation before it takes hold for the long haul. This is good news for home affordability; lower inflation helps boost borrower buying power.

3. Today’s Rate Decision is a Step in the Right Direction for the Economy

The Federal Reserve has two goals: full employment and price stability. The unemployment rate remains low at below 4%, but increasing inflation is causing problems in the US economy. The Federal Reserve’s focus on reining in inflation and today’s announcement will make a significant impact in helping to stabilize the economy as a whole.

Contact us or one of our qualified Loan Officers to learn more!

Author: James Baublitz, VP Capital Markets

Related Posts

Mortgage Market Insights: Inflation, GDP, and Rate Expectations
Mortgage Market Insights: Inflation, GDP, and Rate Expectations

After a dynamic week in the market, we thought it would be helpful to share some key highlights. Let’s dive into the recent events and their impact on inflation, GDP growth, and interest rate expectations. GDP Surprise Yesterday, there was a significant selloff following the release of the Q1 GDP report. Gross Domestic Product (GDP) […]

June 30, 2023
Full Post
The Federal Reserve Increases Federal Funds Rate – Here’s Why It Matters!
The Federal Reserve Increases Federal Funds Rate – Here’s Why It Matters!

The Federal Reserve’s latest meeting just wrapped up, so what are the key takeaways for you? This afternoon, the Federal Reserve increased the Federal Funds Rate by .25%. It’s critical to understand that when you might see headlines about the Fed increasing their target rates, it usually doesn’t directly impact the mortgage rate you’re able […]

February 01, 2023
Full Post
New Conforming Loan Limits Are Here!
New Conforming Loan Limits Are Here!

The results are in, and they could have an impact on your home buying journey. Effective today, homebuyers may now borrow up to $726,200 in most counties and up to $1,089,300 in higher-cost areas! The limit on conforming loans backed by Fannie Mae and Freddie Mac is assessed annually. In September, First Home Mortgage responded […]

November 29, 2022
Full Post

Connect With Us