You may have heard that the Federal Reserve raised the federal funds rate by .75% on Wednesday. This rate controls how expensive it is for banks to borrow and lend from each other – which influences how much it costs for most consumers to borrow money, too.
What does this news mean for mortgage rates and your homebuying journey? Here’s what you should know about the Fed’s latest move:
- The Fed is focused on fighting inflation: Over the past few months, the Federal Reserve has made it clear that reducing inflation is its top priority. With inflation continuing to rise in August, another rate hike was expected. Even if these rate increases restrict borrowing (including home financing) right now, the Fed’s goal is to stop inflation from becoming a long-term economic problem.
- Expect volatility in the coming weeks: Mortgage rates will likely fluctuate in response to these rate changes. The markets were still speculating how high the hike might be in the lead-up to Wednesday, so rates could swing greatly from day-to-day as the market finds its footing.
- Opportunities are out there: While rates are higher than they have been, volatility means that there could be opportunities to take advantage of rate fluctuations to lock in a lower rate. And for those ready to buy for the long-term, a more restricted market could mean a chance to capitalize on the price cuts and increased inventory we’ve observed in recent months.
- Affordability matters more than ever: The potential for higher rates means it’s prime time to ensure you can access tools that make buying a home as competitive and affordable as possible. This includes shopping around to ensure you’re getting the right loan terms for you, exploring low-down payment options you might be eligible for and asking about flexible features such as TBD locks and float-down options.
While more rate hikes and volatility may sound intimidating, we’re here to help you understand the market and navigate it with ease. Our marketplace is designed to help you access the affordability tools that this market calls for, all in one place. Create an account now to start exploring your options.
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