Last Wednesday, Federal Reserve Chair Jerome Powell relayed the conversations from the Fed’s two-day meeting. As of this meeting, the Fed Funds rate remained unchanged and they said that they will maintain their mortgage-backed security and treasury purchase plan of at least $120 billion per month. The Fed expressed that they feel inflation is ramping up, and they expect it to run “hotter” than previously determined. Their inflation target via the PCE index will average around 3.4% instead of the previous 2.4% target. Powell also said that he believes the current level of inflation to be transitory or passed on to the consumer, but it should fall to a level near 2% in 2022.
Mortgage rates have an inverse relationship with bonds or mortgage-backed securities. When bonds drop in price, interest rates increase. Considering last week’s announcement, bonds dropped precipitously, causing mortgage rates to move considerably higher, and are roughly a quarter of a percentage higher than they were a week ago, which puts them back to mid-April levels. Despite this increase, rates are still considered to be very attractive and near their all-time lows. Homeowners that have yet to capitalize on these ultra-low rates should look to take advantage prior to these expected hikes. In addition, future homebuyers will look to purchase a home and take advantage as well.
Call your Advisors Mortgage Loan Officer today to discuss the current market in more detail and to learn what you qualify for.