This week, the Federal Reserve raised its benchmark interest rate by another 0.5 percent – its seventh consecutive increase in 2022.
This December rate hike comes as the result of continued efforts to curb inflation, an uphill battle the Fed has been facing since the start of the pandemic. Still, the 0.5 percent increase is less than the past four historic rate hikes, which could be a sign of better things to come.
|
FOMC Meeting Date |
Rate Change (bps) |
Fed Benchmark Interest Rate |
|
December 14, 2022 |
+50 |
4.25% to 4.50% |
|
November 2, 2022 |
+75 |
3.75% – 4.00% |
|
September 21, 2022 |
+75 |
3.00% – 3.25% |
|
July 27, 2022 |
+75 |
2.25% – 2.50% |
|
June 16, 2022 |
+75 |
1.50% – 1.75% |
|
May 5, 2022 |
+50 |
0.75% – 1.00% |
|
March 17, 2022 |
+25 |
0.25% – 0.50% |
During the Fed’s December 14 meeting, Chair Jerome Powell offered a positive, but realistic outlook on the future of inflation and the national economy.
“The U.S. economy has slowed significantly from last year’s rapid pace,” he said. “We will stay the course until the job is done.”
Powell stated that future rate hikes may be necessary to push inflation down to target numbers. If you’re looking to buy a home, act now before mortgage rates are affected. Total Mortgage experts are on standby and would be happy to discuss your homebuying needs.
The Federal Reserve, also known as the Fed, is the central bank of the United States. One of its main responsibilities is to implement monetary policy, which involves setting the target for a key interest rate known as the federal funds rate. When the Fed increases this rate, it can affect other interest rates, including mortgage rates.
When the Fed increases its target rate, it usually becomes more expensive for banks to borrow money, which in turn can lead to higher interest rates on loans, such as mortgages. This can make it more expensive for consumers to borrow money to buy a home, which can impact the housing market. However, the exact impact on mortgage rates can vary and is not always straightforward.
It’s important to note that the Fed does not directly set mortgage rates. There are many other factors that can affect mortgage rates, such as the overall state of the economy and the demand for housing. It’s also worth keeping in mind that the Fed’s target rate is just one of many factors that can influence mortgage rates, and it may not have a significant impact on them in the short term.
As the Fed continues to adjust interest rates in accordance with the national economy, it’s important to stay informed and make sure your mortgage rates are in check. Contact a Total Mortgage loan officer today for more information.
With experts everywhere predicting future increases to the Fed’s benchmark rate, prospective buyers should look ahead and evaluate their best path to homeownership. Although the Fed’s actions do not directly affect mortgage rates, we could still see them change in 2023 in accordance with inflation, housing demand, and more. Get started with an application now if you’ve been thinking about buying your next home.
Total Mortgage loan officers are also on standby 24/7 and ready to offer their expert advice. Contact one today.
Source: totalmortgage.com