Recent Fed Hike and Effect on Housing

Recently, the Fed hiked the Fed Funds Rate by 0.75%. This was the third rate hike of the year and the Fed also projects hiking another 1.75% over the four meetings that remain this year.

Remember, the Fed Funds Rate is the overnight borrowing rate for banks and it is not the same as mortgage rates.

But you may be wondering: How does this move in the Fed Funds Rate affect mortgage rates?

Mortgage rates are primarily driven by inflation, which is at a 41-year high. When the Fed hikes the Fed Funds Rate, they are trying to slow the economy and curb inflation. If the Fed is successful in cooling inflation, mortgage rates should decline. History proves this during rate hike cycles for the past 50 years.

Reach out to a local advisor today. We’re here to help you navigate these uncertain times and find you the best opportunities for a purchase or refinance.