Fed Hike Expected to Boost Mortgage Rates

The Federal Reserve is expected to raise interest rates on Wednesday, but mortgage professionals are more concerned about the Fed's projections and the bond market's response.

A quarter-point hike in rates has been priced into the markets, with 85% of economists surveyed by Reuters now expecting a rate increase, up from just over two-thirds who expected no change after last month's inflation report.

The bigger question for mortgage rates is what Fed officials project for the remainder of the year and how Chair Kevin Warsh characterizes the inflation outlook.

While a Fed hike would not automatically produce an equal increase in 30-year mortgage rates, it could lead to higher borrowing costs if policymakers signal that additional increases are coming.