Mortgage Rates Calm Ahead of Federal Reserve Decision

Interest rates on mortgages inched higher this week, just a day before the Federal Reserve’s policy-setting committee decides whether the federal funds rate will increase for the first time in almost a decade. The benchmark 30 year fixed rate mortgage is now at 3.910%. Same for the 15-year, arriving at 3.11 percent from last week’s 3.10 percent.

Any rise in interest rates will be gradual if the Fed raises rates in the future, starting with a fraction of a percentage point most likely.

Like in Britain, rates there have been held close to zero since the depths of the financial crisis in the hope of fostering an economic recovery.

“We’re still on track for the best year of home sales since 2007”, Becketti said. The Fed will meet next in October and then December.

Mortgage financing giants Fannie Mae and Freddie Mac have low-downpayment programs for qualified families, which can serve as a buffer against higher mortgage rates later this year or next year, depending on the Fed’s strategy.

Unemployment has fallen in both the U.S. and the United Kingdom , fuelling speculation that a rate rise is on the way If central banks are supposed to tinker with rates, why is this particular move so important?

Recent stock market volatility has more to do with economic problems in China and other factors unrelated to USA interest rates, she said. Fed members produced their best guesses for when inflation rates will reach 2%. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates.

“From a consumer standpoint, even after a potential rate hike, rates will remain at historically low levels”, he said.

While it waits to see what the Fed does, the mortgage market has been calm the past few weeks.

“We continue to expect that rates will trend up over the medium term”, says Mike Fratantoni, chief economist at Mortgage Bankers Association. Visit the following links for the Regional and National Mortgage Rate Details and Definitions.

Trulia surveyed more than 2,000 USA adults earlier this week to get their take on rising mortgage rates. With 20 percent down, the rate increase could mean some buyers would qualify for less on a mortgage, but it would not turn those buyers away.

Finally, consumers may need to rethink their target prices based on what they can afford with higher rates.

“Interestingly, for Americans who are looking to purchase a home this year, mortgage rates are not the primary concern”.

Mortgage rates are not tied directly to the federal funds rate and how they will respond is hard to predict, said Dick Lepre, a senior loan officer with San Francisco’s RPM Mortgage who writes the weekly RateWatch Newsletter.