If you’re planning a home purchase or refinancing it soon then now is the right time to lock a mortgage rate, because the next Federal Reserve meeting is set for Nov. 2–3.
There is a strong possibility of the mortgage rates getting higher after the November meeting, so it is a good idea to lock in the mortgage while rates are still low today and save money in the long run.
How do the mortgage rates get affected by the Federal Reserve?
Even though the Fed does not directly set mortgage rates, their policy affects the borrowing costs for banks.
If the interest rates for banks are raised by the Fed, then usually the expenses get passed onto consumers, so a revised Fed policy would lead to an increase in the interest rates on other products and to higher mortgage rates for borrowers.
What action of the Fed would push mortgage rates up?
Due to the pandemic, the Fed’s massive bond-buying action was an effort to help revive the national economy and keep rates for all types of borrowing low.
Now with the pandemic under control and the economy recovering, in an effort to get back its pre-pandemic pattern experts are expecting the Fed to slow down its bond purchases.
As the market responds to the Fed pretty quickly, many experts predict the November meeting could be the start of the taper, leading to mortgage rates to move upwards.
Greg McBride, Bankrate’s chief financial analyst urge borrowers who are considering refinancing, to act quickly and lock rates because rising inflation and a less stimulative Fed are both suggestive of higher mortgage rates in the times to come.
Mortgage rates tend to track the 10-year Treasury, which has gone up from under 1 % earlier in the pandemic 1.6 %.
Reference Source: Bankrate
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