Mortgage Rates Due To Feds Unchanging Rates For 1st Quarter 2019 Was PUBLISHED On January 31st, 2019
Many were pleasantly surprised yesterday when Federal Reserve Chairman Jerome Powell announced the FEDS are not increasing rates for first quarter 2019.
- The stock market went up almost 500 points on this news
- It brought major smiles to CEO’s of major companies
- But what does this mean to American consumers?
- What does this mean to mortgage rats due to FEDS unchanging rates?
- Will this affect credit card holders?
- How does this affect investors who have funds invested in bonds and treasuries?
- The stock market is happy with this news
- Is this good news for home buyers?
- Is it good news for mortgage lenders?
- Mortgage Rates Due To Feds Unchanging Rates mean stable rate?
What benefit does this have on consumers?
News FEDS Not Increasing Rates For First Quarter 2019 Means Good News For Consumers
News FEDS not increasing interest rates for first quarter 2019 is definitely good news for consumers. Will Mortgage Rates Due To Feds Unchanging Rates be stable? On Wednesday January 30th, the Federal Reserve Board unanimously agreed and voted not to raise not to raise the benchmark federal funds rate in the first quarter 2019. The announcement came by Federal Reserve Board Chairman Jerome Powell. This is great news by the FEDS after having raised the benchmark federal funds rate by 25 basis points the previous month.
The Federal Open Market Committee, FOMC, issued the following statement:
“In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.”
2018 Was Worst Year For Interest Rate Hikes
The economy is doing better than expected since Donald J. Trump was elected President of the United States.
- Lowest unemployment numbers in the history of the United States
- Record-breaking corporate profits quarter after quarter
- Homeowners are enjoying double-digit appreciation in their homes
- The stock market is hovering at 25,000 which is the highest level in history
- Unemployment numbers for minorities and women are the lowest in history
- Housing prices are rising with low inventory
- FHFA raised conforming loan limits to $484,350
- FHFA raised conventional loan limits for three years in a row due to rising home prices
- HUD followed in FHFA footsteps and increased FHA Loan Limits to $314,827
- Despite the highest mortgage rates since 2008, housing demand remains high
There does not seem to be any signs of a housing correction in the near future.
2018 Was Worst Year For Interest Rate Hikes
2018 was a great year for the U.S. economy. However, it was the worst year for interest rate hikes. The Federal Reserve Board raised interest rates four times. The news by Fed Chairman Jerome Powell that the FEDS will not be increasing interest rates came as a relief to many who carry high amounts of debts.
Bank Rate’s Chief Financial Analyst Greg McBride said the following after the news by Chairman Powell was announced:
“It gives borrowers a reprieve from rising rates, but borrowers still need to operate under the assumption that rates will rise further in 2019”
Furthermore, he stated:
“So use this as an opportunity to keep paying down debt, refinancing into fixed rates or grab low interest rate offers.”
The Federal Reserve Board normally does not increase rates in consecutive months.
- Economists and experts are expecting that the Federal Reserve Board will be increasing interest rates in 2019
- Many feel that the reason the FEDS did not increase rates in January was to see and take a wait and see approach and take some time in evaluating the overall economy
- The FEDS did announce late last year they were expected to increase rates in 2019
- Future interest rate hikes were not mentioned on yesterday’s news conference by Chairman Jerome Powell
- Consumers should use this good news and opportunity to pay down high-interest debt
- They should also take advantage of refinancing their adjustable-rate mortgages to fixed rates
Consumers should take advantage of lower interest rate balance transfer offers.
Good News For Mortgage Rates Due To Feds Unchanging Rates
Whenever the market predicts higher mortgage rates, the pricing is already factored in way before the announcement.
- The was expecting news that Chairman Powell was going to increase rates weeks ago
- So with anticipation of rates increasing, mortgage rates already factored this in
- Prior to Wednesday’s announcement, 30 year fixed mortgage rates were averaging 4.45% for prime borrowers
- The good news with Mortgage Rates Due To Feds Unchanging Rates is it may come down
Or in the worst scenario, mortgage rates due to FEDS unchanging rates will keep mortgage rates stable at 4.45%.
Mortgage Rates Due To Feds Unchanging Rates And How Rates Are Determined
In general, mortgage rates is normally based on the U.S. Ten Year Treasury Notes. Mortgage Interest Rates is not based on the federal funds rate. Federal Funds Rate is a short term interest rate where banks lend money to other banks. However, the federal funds rate does has an indirect factor on mortgage rates. Federal Reserve Board’s policy has ripple effects on mortgage interest rates and the economy. Mortgage Interest Rates are based on long term interest rates. Important factors that impact mortgage interest rates are the volatility of the economy and the strength of economic numbers.S
This BLOG On Mortgage Rates Due To Feds Unchanging Rates Was Written And Published By Gustan Cho National Managing Director at Gustan Cho Associates Mortgage Group & News