Making Sense of This Week's Fed Drama

Posted To: Mortgage Rate Watch

The Fed released a new scheduled policy announcement this week as well as updated economic projections. Relative chaos ensued. Let’s talk about why and what it means going forward. Background on Fed Funds Rate and Mortgage Rates There’s a fairly prevalent misconception that the Fed sets/changes mortgage rates directly. That’s really only true for HELOCs (home equity lines of credit, which are often based on a rate that’s based on the Fed Funds Rate). The Fed does not set/change mortgage rates, even though things that happen on “Fed Day” can have a big impact. The rate the Fed changes is the Fed Funds Rate , which is a target that big banks use in determining the rates they charge each other for overnight loans. This rate is important. Even though banks have lots of money, depending on the day…(read more)

Forward this article via email:  Send a copy of this story to someone you know that may want to read it.


Making Sense of This Week's Fed Drama
Making Sense of This Week's Fed Drama

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *