Debunking Myths about FED Interest Rate Changes

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Filed under: Market Comentary

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We often have an increase in questions about interest rates when the Fed meets to discuss changes in the rates. Since there was a meeting last week, we have decided to address this issue to help you understand how these changes will impact the average consumer.

Rates are Going Up

The decision last week was to raise the interest rates, which is an indication of the good economy we are currently experiencing. What most people don’t understand is that when the Fed raises rates, it doesn’t necessarily have a direct correlation on mortgage rates. While it is possible that the mortgage industry could be impacted by the Fed raising interest rates, we never know the full impact until after the change has occurred.

Whenever these types of changes are being announced, we keep a close eye on the market to see what is happening. This attention to detail gives us the opportunity to lock in the lower rates for our customers if we see that the lenders are moving to raise mortgage interest rates.

Other Factors in the Economy

Interestingly, on the day that the Fed announced the rate increase, we saw one of the biggest Bond rallies that has happened since the election. The mortgage bond market responded positively, which is good for interest rates. It wasn’t a huge move, but we welcome anything moving in a positive direction.

Historical Trends in Mortgage Rates

If you look at the historical data, you will see that mortgage rates are still well below what would be considered “normal.” Even though we are off of the absolute lows that were experienced over the past few years, we are still experiencing such great rates that mortgage interest shouldn’t stop you from buying the home of your dreams.

We don’t know what is going to happen in the future, but small changes in the FED interest rates shouldn’t be a cause for panic or worry. People are often very uneasy about any interest rate movement in an upward direction. But, these small changes won’t have a big impact on your family or budget.

If you have questions about interest rates or financing a home, then you are always invited to talk to our team for more information. We will gladly answer your questions and help you find the best financing solutions for your family. Call us today to learn more about the interest rates that are available for your mortgage. We are here to help!

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