Investors May Outweigh Fed's Influence on Mortgage Rates
The Federal Reserve's upcoming meeting on September 16 could raise short-term interest rates for the first time in over three years. However, mortgage rates may not directly follow this change due to investor reactions.
Analysts expect a series of rate hikes ahead of the FOMC meeting, causing 10-year treasury bonds to spike again, and higher bond yields are pushing average 30-year rates over 7% for the first time in 16 months. As of September 10, Mortgage News Daily pegged the daily rate at 7.17%, nearly a full percentage point higher than a year ago.
Melissa Cohn, regional vice president of William Raveis Mortgage, notes that inflation 'likely to get worse' before it gets better and investors are betting on a rate increase due to no clear indications that inflation is easing. A 25-point rate hike would not necessarily affect 30-year loans, as short-term rates are not directly tied to mortgage rates.