Mortgage Rates Increase Following Fed Decision

  • December 17th 2015

by Tianna Mañón

Mortgage Rates Increase Following Fed Decision: Figure 1

It probably comes as no surprise that long-term mortgage rates jumped a bit on Thursday, but the increase wasn’t significant.

Long-term rates averaged 3.97 with an average 0.6 point. This is a two percent increase from last week’s reported rate of 3.95 percent and comes in response to the Federal Reserve’s announcement to increase rates.

“As was almost-universally expected, the Federal Open Market Committee (FOMC) of the Federal Reserve elected this week to raise short-term interest rates for the first time since 2006,” Freddie Mac chief economist Sean Becketti said. “We take the Fed at its word that monetary tightening in 2016 will be gradual, and we expect only a modest increase in longer-term rates. Mortgage rates will tick higher but remain at historically low levels in 2016. Home sales will remain strong, but refinance activity should cool somewhat. Novel policy approaches such as quantitative easing injected significant liquidity in the economy over the past seven years. As a result, the Fed is forced to employ some new tools, such as reverse repos, as it tightens monetary policy. We are likely to see some short-term volatility in fixed-income markets as market participants adjust to these new tools.”

Mortgage Rates Increase Following Fed Decision: Figure 2

The UrbanTurf Mortgage Rate Disclaimer: The rates reported by Freddie Mac for 30-year mortgages are usually the best rates that the most qualified borrowers can get, so borrowers or those considering refinancing should not necessarily read this news and think that they can go out and get a loan with the quoted interest rate.

This article originally published at https://dc.urbanturf.com/articles/blog/mortgage_rates_increase_after_fed_decision/10702.

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