Friday, March 17, 2017

Mortgage Rates Steady to Slightly Lower

Mortgage rates managed to maintain or increase the improvement since Wednesday's 3/15/2017 Fed announcement.  While the Fed did indeed hike the rate, the hike was widely expected and anticipated and had already been accounted for in the bond markets (like those that dictate mortgage rates).  The easiest way to understand this is to consider that most bond market securities can move/change every millisecond of every business day.

The Fed Funds rates, on the other hand, only changes/moves at the end of scheduled Fed meetings eight times per year.  If bond markets are reasonably confident the Fed will be hiking or decreasing interest rates, they can begin trading accordingly well in advance and thus build that into the rates we see before it is even officially announced.  That exact scenario played out over the past month and accounts for much of the move higher in rates from late February through Fed day.

Because bonds were already in position for the Fed hike meaning they had already anticipated the outcome, they were free to react to other aspects of the Fed policy.  Specifically, investors were expecting the Fed's forecast to show faster rate hikes in the future.  This accounts for some of the move higher in rates in early March.  The Fed's actual forecast turned out to be fairly tame and rates were thus able to move quickly lower.

There hasn't been much movement since the initial reaction to the Fed this past Wednesday. Conventional 30yr fixed rates continue hovering around 4.25% for top tier scenarios. 

Let us help you list your home for sale or allow us to guide you through your house hunt and purchase, Rockland Financial can help you A to Z...