The Chairman of the Federal Reserve Jerome H. Powell is on the move and has raised the shorter term interest rate by one-quarter of a percent today. Powell indicated that he sees the current 3.9% unemployment rate falling to 3.6% in 2018 supporting his plan to increase rate twice more this year. The Fed Chairman feels the need is now for increasing rates as a hedge against inflation worries based on the robust economy and strong jobs market.
At the end of today’s open market meeting officials noted that the economy has been growing at a solid rate which is an increase from the sentiment shared in May of this year, a sentiment of moderate growth was widely held then. With this the seventh rate increase since the end of the “Great Recession” the new benchmark rate is now 2% which is a long way from the zero percent rate we saw then.
Today’s article from the New York Times lays out some interesting details.
All of this does not signal gloom and doom for mortgage rates. In the past when the Fed increased their benchmark rate there would be an instant reaction in the mortgage arena. However, what we are seeing today is not much impact to mortgage rates. The average overall interest rates were left basically unchanged with today’s news. With today’s information exchange being so rapid, markets are pre-pricing for anticipated increases and slightly oversold now, so impacts to the overnight market are absorbed in the current pricing.
This means that we need to act now while rates remain lower. Give me a call to find out how we can save you time and money in getting your loan approved and closed now. Save now on the summer and fall market rush before mortgage rates rise.