Fed’s Leaves Home Loan Interest Rates Alone

The Federal Reserve announced Wednesday that it will not raise interest rates as quickly as they had originally anticipated. The Fed dimmed its outlook as the economy showed signs of slowing.

This means short-term interest rates will stay steady. The Fed’s benchmark rate likely will increase just twice this year, down from their original prediction of four.

What could this mean for mortgage rates? Rates are only loosely tied to the Fed’s short-term rates, the Fed’s actions do have some influence and this could keep mortgage rates down in the coming months.

“As we enter the peak spring buying season, it’ll be even more critical to follow the movements of mortgage rates,” notes Jonathan Smoke realtor.com®’s chief economist. “Buyers who think those rates aren’t moving might have a rude awakening when they realize the recent trend upward.”

Source: “Fed Dials Back Pace of Rate Hikes,” The Wall Street Journal (March 17, 2016) [Log-in required.] and “After Throwing Us a Curveball, Where Will Mortgage Rates Go?” realtor.com® (March 10, 2016)