Mortgage Rates Little-Changed With Fed Looming

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Posted To: Mortgage Rate Watch

The Fed doesn't set mortgage rates , but changes in Fed policy are more than capable of sending shockwaves through the markets that affect mortgage rates. In all but rare cases, easy monetary policy is good for rates and constrictive policy is bad. There are notable exceptions, but this economic cycle isn't likely to be one of them. That means the a Fed rate hike (or the expectation for a Fed rate hike) will have (or have had) a negative effect on rates (i.e. pushing them higher). The notion of expectations is important though. Markets do their best to already be adjusted to anything that is likely to happen. For instance, if market participants know that strange weather in Florida is damaging the orange crop in general, commodities traders might trade the price higher preemptively (because...(read more)

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Source: http://www.mortgagenewsdaily.com/consumer_rates/479988.aspx

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