ldquo;Officials voted to hold their benchmark rate steady and delivered an about-face from their policy stance six weeks earlier,rdquo; said the Wall Street Journal. ldquo;Last month they raised their benchmark rate by a quarter percentage point to a range between 2.25 and 2.5 and signaled two more rate rises were likely this year.rdquo; Instead, the Fed just signaled they were going to slow down, applying patience to the equation.
Reaction was swift. Immediately following the Fedrsquo;s announcement, the stock market rallied. The Dow Jones Industrial Average was up 435 points and the Nasdaq rose by 155 points.
So how will this surprising announcement affect homebuyers?
ldquo;Many people think mortgage rates are tied to the Fedrsquo;s short-term rate, but there isnrsquo;t a direct link,rdquo; said the New York Times. ldquo;Most 30-year fixed-rate mortgages are priced off the 10-year Treasury bond, which is influenced by a variety of factors, including the outlook for inflation and long-term economic growth here and abroad.rdquo;
While interest rates on mortgages arenrsquo;t necessarily a product of benchmark rates, consumer confidence certainly plays a role. A new CNBC report shows just how sensitive buyers can be to the slightest increase in mortgage interest rates. ldquo;Mortgage application volume decreased 3 percent last week from the previous week, according to the Mortgage Bankers Association,rdquo; they said. This was in response to average interest rates for 30-year fixed-rate mortgages rising ever so slightly, from 4.75 percent to 4.76 percent.rdquo;
Of course, ldquo;The biggest drop in application volume was for refinancing, which are most rate-sensitive week to week,rdquo; they saidmdash;and also the most impacted by benchmark rates.
Interest rates for 30-year, fixed-rate conventional loans were expected to surpass 5 this yearmdash;a number that hasnrsquo;t been reached in yearsmdash;but it remains to be seen whether this will still occur. While industry experts were previously pretty unified in their predictions of where rates were going this year, theyrsquo;re largely conflicted now. In fact, they canrsquo;t even seem to agree on what will happen seven days from now.
ldquo;Bankrate.com, which puts out a weekly mortgage rate trend index, found the experts it surveyed were evenly split on where rates are headed,rdquo; said the Washington Post. ldquo;Half said rates will decrease, while the other half said rates will remain >
Copyright© 2019 Realty Times®. All Rights Reserved
Copyright ©2019Realty Times®. All Rights Reserved