Minneapolis, MN: The Federal Reserve raised the Fed Funds Rate today for the fourth time this year, bringing the rate to a target range of 2.25% to 2.50%. This is commonly known simply as a Fed Rate Hike
What is the Fed Funds Rate?
The Fed Funds Rate is only a small portion of what makes up your overall interest rate, and may other things factor in, including the stock market, and global issues, like trade with China and geopolitical problems across the world. For example, 30-yr rates have moved up and down within about a 0.375% range in the past two months.
So How Does A Fed Interest Rate Hike Impact You on a Mortgage Loan?
For the short-term, those looking for standard loans, like a 30-year fixed really won’t be impacted, as what the Federal reserve does only has a partial effect on these rates. It would take a noticeable increase in inflation to impact loan-term rates.
Adjustable rate mortgage loans, and home equity loans tied to the prime rate on the other hand should immediately rise. If you have an adjustable loan, with a change due soon, expect that to rise.
It may be a good idea to refinance those adjustable mortgage loans today. Contact us to discuss your options at (651) 552-3681. For example, if you did a 5-year fixed/adjustable loan 5-years ago, it is going to be going up. How far depends on many variable based on how the original loan was done, but it may be time to lock in something fixed.
Long-term Mortgage Rates Are Still Historically Low
Looking to buy a home in the near future? You can still get some awesome rates from a historical picture. Sure, they are a bit higher than the middle 3’s from a couple of years ago, but pretty attractive compared to the 16% fixed rate I received on my first time home buyer loan back in 1981.
My only suggestion is that as the economy continues to improve, the long-term trend is not your friend. We expect rates to slowly continue creeping up throughout 2019 and beyond. So if you were thinking of buying a home, better sooner than later.