Mortgage Rates and The Feds Confusing Message

We are days before the FHFA hits you with the adverse market fee. This is a 50-basis point fee that will increase rates for the consumer roughly .125-.375 as I discussed last month. The FHFA says it’s to counterbalance the looming 6 billion in forbearance etc. but many in the industry thinks it’s a way for Fannie and Freddie to become independent once again.

Meanwhile, all we hear about in the media is low rates until 2023. 

What’s confusing is you may have recently heard that the Fed announced that they think the Fed Funds Rate will remain at zero through at least 2023.  

First and foremost, the Fed Funds Rate and Mortgage Rates are two totally different instruments.  The Fed Funds Rate can change from one day to another, but a Mortgage Rate may be in effect for over 30 years.  

Mortgage Rates will be affected by inflation because inflation erodes the buying power of the fixed return that a mortgage holder receives.  The best way to combat inflation is by raising the Fed Funds Rate. 

If inflation begins to rise, and there are already some signs of this, Mortgage Rates will start to climb in response.  All this can occur while the Fed Funds Rate is at zero.  

If you would like to see an example of this, look no further then what transpired a few years ago when Mortgage Rates rose nearly 1%, while the Fed Funds Rate remained at zero.

The current rate environment presents an incredible opportunity that should be taken advantage of. Contact me so I can help you benefit before things change.


My point is if you are looking to refinance – rates are good now – we don’t know what the future holds and as a consumer I think it may be in your best interest to act now! 

To Lock I need a full application and a credit report – there is no other way so I need this fully completed:

Link to our online application: 

Garrick Werdmuller
(510) 282-5456