Given the state of the economy, it wasn’t particularly surprising that the Federal Reserve chose to keep rates unchanged. What did raise a few eyebrows was three members voted to raise rates, citing a an ongoing concern over persistent inflation. Analysts now expect the Fed to raise rates later this year.
Homebuyers can expect mortgage rates to remain in the 6.5% range with the possibility of higher rates if inflation remains a problem.
With a blunt “The Committee will deliver price stability,” the Federal Reserve announced that it will preserve the current benchmark rate in the range of 3.5% to 3.75%. Of course, this comes in the face of high inflation brought on primarily by the Iran War.
This also marks the first fed meeting under the direction of President Trump’s hand-picked selection, Kevin Warsh. Warsh also announced the formation of five task forces which will closely examine the Fed’s operations. Warsh had previously announced that he planned to bring “regime change” to the central bank.
It’s all speculation, of course – what isn’t these days? – but moderate job growth and a rising unemployment rate coupled with slowing inflation have real estate analysts, home buyers and sellers, and just about everyone else, hoping that the Federal Reserve will actually cut interest rates in their September meeting. Currently, the mortgage rates is 6.78% for 30-year fixed loans.
It certainly won’t happen overnight – expect the initial decline to be modest – but once there are significant decreases, expect more home to come on the market with a corresponding drop in prices.
Maybe.
For the fourth time, the Federal Reserve has raised its benchmark interest rate by three-quarters of a point but indicated that future hikes might possibly be lower. Noting that hikes take a while to affect the economy and inflation, many analysts expect the next rate increase to be one-half a point.
While the economy continues to grow and hiring remains strong, sales of existing homes have decreased for eight straight months.
Currently, mortgage rates remain above 7 percent, up from 3.14 percent just a year ago.
The good news is that the Federal Reserve is keeping its benchmark interest rate close to zero. While it’s not directly linked to mortgage rates, it does bear a strong influence.A
The not-so-good news is that lending standards have gotten stricter as banks are concerned about the long-range economy.
Analysts say that consumers with a credit score above 700 will most likely get the best rates while those with lower scores may have difficulty securing a loan.