What Will This Week’s Fed Meeting Mean for Mortgage Interest Rates?

The Federal Open Market Committee (FOMC) is meeting September 21 and 22 to discuss the next steps on broad issues related to monetary policy. But in the mortgage industry, there’s only one question on brokers’ minds: What’s going to happen to interest rates? As of today, the best guess is: Not much. Fed-watching is an industry unto itself, and the phrase that’s caught their attention is “substantial further progress.” That’s how Fed Chairman Jerome Powell described the conditions under which the institution would begin reducing its monthly bond purchases — currently $120 billion — as part of his regime of “qualitative easing.” Shrinking the money supply, or even talk of shrinking the supply, is expected to lead to higher interest rates and,…

Interest Rates Are Higher Under Biden. Good News or Bad?

The hot talk in Washington is about inflation, not interest rates. “We’re experiencing a big uptick in inflation, bigger than many expected, bigger certainly than I expected, and we’re trying to understand whether it’s something that will pass through fairly quickly or whether, in fact, we need to act,” Federal Reserve Chairman Jerome Powell told the Senate Banking Committee last week. Meanwhile, U.S. mortgage interest rates have risen since President Joe Biden took office in January according to Federal Reserve data. On the day he was inaugurated, the 30-year fixed rate was around 2.75 percent. By April 1, it had risen to 3.18 — its highest level since June of last year. Rates have been gradually declining since then but have…

Fed: Rates Staying At 0, More MBS Purchases

The Federal Reserve announced Wednesday that it will continue to load up on mortgage-back securities to ensure credit is available to businesses and individuals to keep the economy afloat during the coronavirus pandemic. “We have been purchasing sizable quantities of Treasury and agency mortgage-backed securities in order to support orderly conditions in the markets, which are vital to the flow of credit in the economy,” Chairman Jerome Powell said. “To sustain smooth market functioning and foster the effective transmission of monetary policy to broader financial conditions, we will continue to increase our holdings of Treasury and agency mortgage-backed securities at least at the current pace. These purchases are also fostering more accommodative financial conditions.” Powell emphasized the need to keep…