Recently, the Fed hiked the Fed Funds Rate by 0.75%. This was the third rate hike of the year and the Fed also projects hiking another 1.75% over the four meetings that remain this year.
Remember, the Fed Funds Rate is the overnight borrowing rate for banks and it is NOT the same as mortgage rates.
But you may be wondering: How does this move in the Fed Funds Rate affect mortgage rates?
Mortgage rates are primarily driven by inflation, which is at a 41-year high. When the Fed hikes the Fed Funds Rate, they are trying to slow the economy and curb inflation. If the Fed is successful in cooling inflation, mortgage rates should decline. History proves this during rate hike cycles for the past 50 years.
A good example of this is to review what has happened with mortgage rates over the past week since the Fed Funds Rate increase on 06/15/22.
Mortgage rates have IMPROVED by over .625% and in some cases even more. Do allow the media headlines on the Fed Rate Hike dictate the action you take with your mortgage.
Now is as good of time as any to take advantage of the benefits of a home purchase or a mortgage refinance especially for those looking to consolidate debt as fears of a recession continue to build.