What could an increase of the Fed Funds rate mean to you? Are rates going up??
It is widely speculated today that the FOMC (Federal Open Market Committee) will recommend to increase the Fed Funds rate by .25. The rate increased is a short-term rate that has direct effect on debt such as credit cards and installment loans. How this rate increase (typically) affects mortgage rates is considered an indirect effect. By the overnight rate increasing, this usually has a positive effect on the stock market, which has a negative effect on the bond market (typically) and, therefore, rates go up to overcome any negative effect on the bond market. Very often it is not the increase itself, but the words the Fed Chair, Jerome Powell, will say in his comments after the close of the 2-day meeting. Today, September 26, 2018, we are more concerned about his comments and how it will set up for further increases, (including a proposed increase in December).
The fact that this assumed rate hike might happen should not be something causing panic but rather an indication that our economy is recovering from the economic meltdown of 2008. Now is still a great time to buy and rates are still at record lows.
If you have any concerns about mortgage rates or would like to discuss way to achieve your goal of home ownership now is a great time to have that conversation.
