How The Fed Affects Mortgage Rates

Dated: 03/25/2018

Views: 465

Image title

Contrary to popular belief, the Federal Reserve’s Benchmark Federal Funds Rate or “Fed Rate,” does not directly affect mortgage rates. It affects the monetary policy of the government and therefore the monetary policy of banks which set short term lending and mortgage rates. In general, fixed mortgage rates are tied to the government’s 10-year Treasury note.

So what does that mean to you? If you already have a fixed rate mortgage, it does not affect you at all. Your mortgage rate remains the same for the life of the loan. If you have an adjustable rate mortgage (ARM), then your rate will most likely increase when it enters the adjustable period. The Fed Rate influences short term Treasury Bonds, which is how the rates change during the adjustable period. Short term Treasury Bonds include 3-year, 5-year, and 7-year.
The Fed just raised the rate on a quarter of a point to 1.0% on March 15, 2017. This comes after the Fed raised the rate a quarter of a point in December 2016 and raised it from 0.0% to 0.5% in December 2015. The rate had been at zero since the financial collapse of 2007.
The Fed is also expected to raise rates two more times this year to a total of 1.5%. They have also indicated that the Fed Rates will rise over the next two years to 3%. So what does this all mean? Based on the Fed projections, mortgages are at the lowest rates we’re likely to see for a while. If you are shopping for house or thinking about shopping for a house, now is the time to do it!

Hickory Real Estate Group is a full service real estate company located in Hickory North Carolina.  We serve Hickory, Newton, Conover, Granite Falls, Hudson, Lenoir, Mountain View, Lake Rhodhiss, and Lake Hickory.

We offer knowledge, personal attention and communication that is needed for a smooth home buying experience. Just call or email us and you will see how quickly we respond to your needs.

We work hard to give our clients the best possible real estate experience and we want to work to get your business. You’ll see our work ethic and efficiency is second to none.

Whatever your real estate needs call for we can help.  SEARCH NOW!

Blog author image

Information HREG

Hickory Real Estate Group wants you to enjoy all that Hickory NC has to offer. We share homes listed for sale, local information, favorite hot spots, cool places and events happening around the Hickor....

Want to Advertise on this Site?

Latest Blog Posts

Townhouse For Sale Conover NC

Check out this super cute one level townhouse in Conover! This home is just perfect with a wonderful open floor-plan, 2 bedrooms, 2 bathrooms living room, and sunroom. The kitchen has just what you

Read More

Berkshire Place Home For Sale In Mountain View NC

Absolutely beautiful & immaculate home with 3 bedrooms, 2.5 bathrooms, master on main and basement in Berkshire Place. Spacious living room is bright & open with hardwood floors & a fireplace.

Read More

One Level Brick Home For Sale In Mountain View Area

Beautiful brick home with 3 bedrooms and 1.5 bathrooms, available in the desirable location of Mountain View, NC. Open floor plan layout with 3 bedroom, 1.5 bath, large kitchen, spacious

Read More

New Construction 3 Bedroom Home For Sale In Conover

NEW CONSTRUCTION home with 3 bedrooms and 2.5 bathrooms in the Newton/Conover area. This home features a great layout with a large living room that goes into a wonderful kitchen with white

Read More