🚨 Fed Rates and Mortgage Rates 🚨

The Fed raised rates on Wednesday, but mortgage rates got better. Why did that happen? Because the federal funds rate does not directly correlate to mortgage rates. Federal funds rate is the rate between bank to bank lending, which usually is a very, very short term type of a loan. So this impacts more the short term types of financing, like auto loans and credit cards. Mortgages, they're 15 to 30 years and that's a very long term time period. So it's a whole different dynamic. Mortgages are more based around the bond market, a very long term, slow moving type of investment, and the 10 year treasury yield, a longer term treasury yield. So kind of apples and oranges. So if the Fed raising rates does not always mean that mortgage rates also raise.