By Guest writer Bob Cahill, Senior Mortgage Banker and Planner at Leader Bank
Last month, the Federal Reserve announced a 0.75% increase to the federal funds rate, raising it to 4.00% — the highest it’s been since 2008. The hike is part of ongoing efforts by the Fed to fight inflation.
So what exactly does this mean for mortgage rates?
While mortgage rates don’t automatically adjust with a hike to the federal funds rate, they change daily based on several factors – including what the Federal Reserve indicates about future inflation and rate hikes as well as investor and bond market reaction. As the Fed has continued to raise interest rates this year, we’ve seen corresponding increases to mortgage rates.
The Federal Reserve also noted today that ongoing rate increases will be necessary to return inflation to 2% over time and emphasized that there is a lag in timing between when monetary policies like rate hikes are enacted and when they have their intended impact on economic activity and inflation. Along with the announcement of the increase to the federal funds rate, the Fed stated that GDP growth was modest in the third quarter of 2022, only 2.6%, and jobless claims remained relatively stable in a robust employment market – two factors that contributed to the ongoing efforts to combat inflation.
For homebuyers currently in the market, it will be important to consider locking in an interest rate as well to be prepared to close quickly with their strongest offer when they find the right home.
Please don’t hesitate to reach out to Bob Cahill if you have any questions. Bob is happy to chat about what this announcement from the Fed means for you. You can reach Bob at (781) 589-8756 or at firstname.lastname@example.org.