Mortgage rates had a rough day on Tuesday possibly in anticipation of today’s Fed meeting. Mortgage rates are modestly worse relative to where we started the week.
Today’s Federal Open Market Committee meeting is the most anticipated one in recent history. For the past seven years the Fed has left the Federal Funds rate near 0% in an ongoing effort to stimulate the economy out of the worst recession since the Great Depression.
The Fed will begin raising short-term interest rates but the question is, WHEN?. The markets currently think there is a 21% chance that the Fed will begin raising interest rates today. Even if they do not there is a 65% chance that the Fed will raise short-term interest rates by December.
It’s important to understand that the Fed does not directly control mortgage rates. However, their actions and words can impact mortgage rates. In addition to watching for any action on interest rates today it will be important to listen for any changes to the Fed’s forecast for the economy (short-term and long-term), whether or not there is a unanimous decision among Fed officials, and any clues as to how aggressively or gradually the Fed may raise rates in the future.
My guess is the Fed will not raise rates today. It should be a very interesting day. The Fed announcement is scheduled for 11AM PST followed by a press conference starting at 11:30AM PST.
Current Outlook: floating