Great News On Interest Rate – FED Dicided Not To Raise It | #GreatNews #GotSomeMoreTime #TalkToYourAgent #SiliconValleyAgent #YajneshRai


Fed on Rate Hike: Not Yet | Realtor Magazine

The Federal Reserve voted Wednesday to continue to leave short-term rates alone, but hinted that a raise is still likely before the end of the year.

Read more: Fed Tightening Sparks a Yawn

Fed Chair Janet Yellen offered an upbeat report about a strengthening economy, while still acknowledging the sluggish first half of the year. Employment is increasing and household incomes are too, she said. While the case for raising rates has strengthened, Yellen said there was no need to raise rates quite yet because inflation remains below the Fed’s 2 percent target.

“We judged that the case for an increase had strengthened but decided for the time being to wait for continued progress toward our objectives,” Yellen said at a press conference following the Fed’s policy meeting.

The Fed has kept the short-term interest rate near zero since 2008. It moved the rate up a quarter percentage point late last year but has kept them flat ever since. Economists largely predict the Fed will make a move to push rates higher at its mid-December policy meeting.

What’s this mean for housing? Mortgage rates don’t exactly follow the federal funds rate, but are loosely tied to it. Mortgage rates follow mortgage bond yields and the U.S. 10-year Treasury. Treasury yields fluctuate based on several factors.

“As for the Fed moves, mortgage lenders like to price in all these expectations before the actual event happens,” CNBC reports in an article called “Why Housing Doesn’t Care About the Fed.” “That’s why mortgage rates rose last December in anticipation of the first rate hike and then fell after that due to other global economic issues.” 

Will mortgage rates keep rising then regardless of what the Fed does? Economists weigh in.

“I think rates are going to stay low, not as low as now, but lower than we are used to,” Jeremy Siegel with the Wharton School told CNBC. “We may get another half-point, three-quarter point in the next two years, on the mortgage rate that’s not going to kill the housing market.”

The 30-year fixed-rate mortgage is around a 3.75 percent national average currently.


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