Update on Interest Rates and the Fed

Interest Rates and your homeAs expected, the Fed increased rates at their most recent meeting. They also indicated they will likely raise rates three additional times in 2018.

Did the headline catch your eye but you are not sure what this is all about, I’ll fill you in.

First, who is the Fed and what do they do?

Bank info

The Federal Reserve Board (the Fed), controls the Fed Fund Rate and the Discount Rate. These are charges for overnight loans from bank to bank or from the Fed to member banks.


What does an increase mean for regular people?

• It could cause banks to increase their “prime rates,” which are often used to calculate interest on consumer products like credit cards and home equity lines of credit (HELOCs).
• Mortgage rates are long-term rates and not directly controlled by Fed rate changes. However, mortgage rates are influenced by Fed policy, and rates can rise in anticipation of future Fed action. There are exceptions, yet home loan rates will typically follow overall interest rate trends over time.

Upcoming change in leadership at the Fed:

In January 2018, the current Fed chair, Janet Yellen, will step aside for a new chair, Jerome Powell. Time will tell whether this transition will impact overall policy.

Here’s what we know:

Despite all the “expert” opinions, there is no way to truly predict the exact outcome for interest rates in the future.  If current rates mean a comfortable payment, then now is the time to buy or refinance.

Hope you find the industry news helpful

Please reach out if I can answer any questions for you or help with financing (or refinancing) your home.

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