Categories
Make Money From Home

Why the Latest Fed Rate Hike Might Not Change Much for Mortgage Rates That Are Already Above 6% – NextAdvisor

Editorial IndependenceWe want to help you make more informed decisions. Some links on this page — clearly marked — may take you to a partner website and may result in us earning a referral commission. For more information, see Ho…….

We want to help you make more informed decisions. Some links on this page — clearly marked — may take you to a partner website and may result in us earning a referral commission. For more information, see How We Make Money.

Key Takeaways

  • Mortgage rates continued to surge this week, with the average rate for a 30-year fixed rate loan hitting 6.35%.
  • Rates are at their highest level since 2008, rising in anticipation of this week’s rate hike by the Federal Reserve.
  • The Fed’s increase of 75 basis points in its benchmark rate won’t have a direct impact on mortgage rates, experts say.

The Federal Reserve ratcheted up its key interest rate Wednesday, but that might not make much of a difference for mortgage rates that are already at their highest level in more than a decade. 

The central bank opted for a third consecutive increase of 75 basis points for its benchmark short-term rate in an ongoing attempt to stifle high inflation. 

The consumer price index (CPI) was up 8.3% year-over-year in August, and while that was lower than the 8.5% seen in July and 9.1% in June, it was still higher than expected. “A lot of people thought we might have hit a peak, so the CPI was expected to be softer this time — not by much, but instead it went up,” says Nicole Rueth, producing branch manager with the Rueth Team Powered by OneTrust Home Loans. 

The Fed’s effect on mortgage rates isn’t direct, and experts say mortgage rates have risen in anticipation of aggressive steps taken by the Fed in raising its key rate, the federal funds rate. That rate is a short-term one that affects what banks pay when they lend each other money; when it goes up, costs for banks rise and it makes them raise costs for consumer debt. 

Rates continued to surge above 6%, hitting 6.35% this week in a survey by Bankrate, which, like NextAdvisor, is owned by Red Ventures. 

When the rate for a 30-year, fixed-rate mortgage jumped above 6% for the first time since 2008 this month, experts weren’t particularly surprised. The surge was in anticipation of the Fed’s latest hike, meaning mortgage rates have likely already baked in this change. The Fed’s official announcement is largely confirmation of what experts already knew was coming.  

Here are the average mortgage rates as of Sept. 21, 2022: 

<…….

Source: https://time.com/nextadvisor/mortgages/mortgage-news/mortgage-rates-fed-sept-2022/

Leave a Reply

Your email address will not be published. Required fields are marked *

Loan Type This Week’s Rate Last Week’s Rate Difference