Fed’s Policy Announcement with Small Impact on Mortgage Rates

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There was a slight increase in the mortgage rates on the day before the meeting of the Federal Open Market Committee which took place on June 18th. The announcement of the Federal Reserve’s policy, however, did not have a great impact on the rates. They went back to their previous level.

The most quoted interest rate on 30-year fixed conforming mortgage loans went slightly down to its previous level of 4.25%. The actual decrease that borrowers will experience is about 0.03%. It will come in the form of lower closing costs.

The small improvement is primarily due to the lack of major changes in the Fed’s policy. The Fed’s monetary policy will remain unchanged with the federal funds rate remaining in the low range from 0 to 0.25%. The buying of mortgage-backed securities will be done at a pace of $15 billion monthly instead of $20 billion monthly. Long-term Treasury securities will be added at a pace of $20 billion monthly instead of $25 billion monthly.

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The analysts have different forecasts for the future movement of the mortgage rates based on the announcement of the Federal Reserve and the current development of the markets. There are those who believe that there will be no major upward movement of the rates because the Fed’s policy did not create any immediate concern to the financial markets. There is likelihood that the rates may fall further down, even though the decrease will most certainly will not be large.

Other analysts point out that the current mortgage rates are at the lower end of the range within which they have been fluctuating over the past year. This, in turn, makes the rates more likely to go up rather than to move down.

Overall, home buyers have to make important decisions in a quickly changing environment with not particularly high certainty regarding the mortgage rates.

Christian

Christian

Christian Calvin mortgage Christian is a contributing writer for Mortgage.info. He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.

Contact: christian@mortgage.info
Christian

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