Austin Klar explains why mortgage rates fell after the Fed raised its rate by 25 basis points. The market had already priced in the hike, and Jerome Powell's comments suggested it could be the last one, signaling a potential pause in future increases.
Federal Reserve raised the federal funds rate 25 basis points, or 1/4 of a percentage point, again at the meeting earlier today, but mortgage rates actually went down after the announcement. How is that possible? This is a pattern that we've seen multiple times after previous rate hikes. Remember, the interest rate the Federal Reserve controls, the federal funds rate, is different than mortgage rates. So when you hear that the Federal Reserve is hiking rates again, it doesn't mean they're raising mortgage rates. It's a different interest rate. So how did mortgage rates fall in response? The market was already pricing in today's 25 basis point hike, but mortgage rates reacted favorably because of comments made by Chairman Powell after the meeting signaling that this might actually be the last rate hike. It's going to depend on what economic data comes in before the Fed meets next month. We're gonna have to wait and see, but a pause is really good news for mortgage rates. If you have questions or wanna know what's going on with mortgage rates, definitely reach out to me. I'd be happy to chat with you and follow for more updates.
