Interest Rates Steady … For Now
There was negative activity in U.S equity markets earlier this month when a member of the Federal Reserve policy setting committee made comments that suggested a possible impending rate hike.
The ripple effect of the comments was swift, with the Dow Jones Industrial Average, NASDAQ and S&P 500 stumbling in response.
It all turned out to be much ado about nothing, as the Fed opted this week to leave interest rates alone.
So why do rumblings about potential higher interest rate make so many people nervous? And what in the world does it have to do with homeowners and their mortgage payments?
You see, if and when Federal Reserve Board Chair Janet Yellen and the other members of the Federal Open Market Committee decide to raise the federal funds rate, mortgage lenders may be less likely to approve new home loans and refinance loans. The Fed has kept the rate low in recent years to stimulate the housing market, and it seems to be working.
The Fed last raised interest rates nearly a year ago, and that was the first increase in nearly a decade. Currently, interest rates are between 0.25% and 0.5%. Economists now say December is the next best chance for a possible rate.
Janet Yellen: She might make it harder to buy a home in a few months.
The Fed doesn’t make mortgage rates (those are “made” on Wall Street). But their decisions certainly affect the mortgage bond market. And since changes in the mortgage bond market affect the current mortgage rates consumers pay, and since 30-year rates, FHA mortgage rates, and VA loan rates are all extremely low (for now), many people are wanting to lock in at the current rate.
That’s where a Standard Mortgage advisor can help. If you’re thinking of buying a home, this could be your last chance to get the current low rates. Click the “apply today” button above to find the office nearest where you live. Or nearest your dream home.