The Federal Reserve has raised its benchmark rate for the first time since 2018

The Federal Reserve’s move to boost its short-term target rate by a quarter percentage point was widely expected.

The Fed said the FOMC “anticipates that ongoing increases in the target range will be appropriate.”

“In addition, the Committee expects to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities at a coming meeting.”

Mortgage rates went crazy in a BAD way after this news because we don’t know how much of a correction to the balance sheet this means. 

What does this mean for mortgage rates currently?  

We’ll we have seen a Significant Increase in rates with mortgage rates hovering in the low to mid 4’s

Mortgage rates don’t move in lock step with the federal funds rate, but instead track the yield on 10-year Treasury bonds, which is influenced by a variety of factors — including how investors expect the Fed to react to inflation.

Mortgage rates have already been ticking higher as a result of inflation, even though they remain historically low: Rates on 30-year fixed-rate mortgages averaged 3.85 percent with 0.8 points as of March 10, according to Freddie Mac, up from 3.76 last week and 3.05 a year ago. (A point is a one-time fee, equal to 1 percent of the mortgage amount, paid to the lender to buy down the mortgage rate.)

You add the rates uptick to soaring home prices and, on average, the implied monthly mortgage payment is up about $500 per month since March 2021, Freddie Mac economist Len Kiefer wrote on Twitter.

This could be temporary as usually inflation can create a recession which could be good for mortgage rates.

If you are looking to buy sell or refinance and want to know when to pull the trigger it may be a good time to visit Fresh Home Loan and fill out some information so we can keep you informed on what the market is doing. 

Garrick Werdmuller
(510) 282-5456