Recently, the Federal Reserve (Fed) raised the Fed Funds Rate by 0.5%, marking the seventh rate hike of the year.
Now, you may be wondering how this could be good news for the housing market (affects mortgage rates)! It’s important to note that the Fed Funds Rate is the overnight borrowing rate for banks, and it is not the same as mortgage rates.
However, the Fed hikes the Fed Funds Rate with the intention of slowing the economy and curb inflation, which can impact mortgage rates.
So, the good news is that consumer inflation has actually moved lower in the last two Consumer Price Index reports, after reaching 42-year highs earlier this year.
If the Fed continues to be successful in controlling inflation, we may see mortgage rates continue to decline. History has shown us that this has been the case during past rate hike cycles for the past 50 years.”