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Mortgage Rates Moving LOWER After Fed Hikes by 0.75%

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The Federal Reserve Board has today completed one of its eight regular meetings in 2022. As expected, they announced a 0.75% rate hike.But if you still think it means Mortgage rates Moved high, think again.

In fact, if you don’t know why Mortgage rates Even if the Fed raises rates, it could fall, so you should read yesterday’s commentary. The Fed does not directly raise or reduce mortgage rates..

It was pretty simple today. The market wasn’t just expecting a 0.75% rate hike already. That was a 100% natural conclusion. The only other option that everyone could claim to be at the table was a 1.00% rate hike, but the Fed’s speakers themselves had already dismissed that idea two weeks ago.

More importantly (and as detailed in the link above), the federal funds rate determination has nothing to do with it. Mortgage rates By the time the decision is actually announced. The only exceptions are when the market is not legally confident about the size of the imminent rate change, or in the very rare case of an emergency rate change during a meeting.

That meant today’s influence Mortgage rates It will have to come from the words of the Federal Reserve’s policy statement or Powell himself during the press conference. In that regard, Powell may need to prepare the Fed to shift gears in the coming months, the Fed’s interest rates are currently at neutral levels, and the pace of rate hikes may need to slow down in response to economic tensions. Said not. He specified that the shift was data-dependent, but it is worth noting that the Fed was the first to explicitly discuss light at the end of the rate hike tunnel in 2022.

Why is it important Mortgage rates?? Have you mentioned the above link yet? Mortgage rates They may easily ignore the Fed’s rate hike on the day it is announced, but they are very interested in the Fed’s rate hike expectations. In fact, securities that track the Fed’s interest rate forecasts over the next few years Mortgage rates..

The net effect today was a slight but rapid decline in interest rate hike expectations between late 2022 and early 2023.Based on the above rationale, this is Mortgage rates And certainly it was. The average lender, even before the Fed, was already nearing its lowest levels since early June. The rise in mortgage-backed securities in the afternoon allowed many lenders to lower interest rates a bit more this afternoon. Lenders who haven’t made any changes today are in a good position to do it tomorrow morning, unless the bond market hits a major obstacle in overnight trading.

Lender rate estimates continue to be broadly stratified, depending on the inclusion of “points” or other forms of higher upfront costs. When it comes to lowering interest rates associated with mortgages, points are currently simply more valuable than usual. In more normal time, one point (also known as 1% of the loan balance) could be worth about 0.25% at a 30-year fixed loan interest rate. Currently, it is worth more than 0.50% in some scenarios.

Paying that point may or may not make sense for an individual borrower, but the fact that it is an option is that many lenders advertise a lower rate with the proverbial asterisk. The result is.

Point aside, the mortgage market is more stratified than usual as different lenders have been affected in different ways by the recent brutal surge in interest rates. The fallout is still being sorted out. Strategies depend on how they move forward, and some of those strategies include lender pricing policies.

Needless to say, the traditional 30-year fixed progress rate ranges from 5.125% to 6.125%, depending on initial costs, scenario details, and lenders. If you need to split all the above differences and come up with one number to capture recent rate changes (in fact, that’s one of my jobs), that number is close to the center of 5% Become. This week is wider than the top (where most of mid-July was).

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