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Fed Raised Rates for 1st Time Since 2006; What Does It Mean?

Keep in mind once again that the Fed does not control long term interest rates. It influences short term rates only. The Fed Funds rate is the rate banks charge each other to borrow funds overnight.

Today’s move seems to be having little impact on mortgage rates, as the markets have already accounted for the increase.

Increases in short term rates do, however, often work their way into long-term rate increases. And b/c the Fed is likely to implement more rate increases next year (per today’s Fed comments), long term rates will likely continue to rise.

This is one more incentive for buyers and borrowers to buy now and lock in historically low rates. We have been saying this for about 8 years now, but I think it might finally be true.

Weak economic reports in the coming months could halt or even reverse the Fed’s rate increases though.

Jay Voorhees
Founder/Broker | JVM Lending
(925) 855-4491 | DRE# 01524255, NMLS# 335646