The Fed’s raised the benchmark interest rate by 0.25% on March 15 2017. What does this mean for homebuyers?
Q. Do Fed rate hikes affect mortgage interest rates?
A. The Fed rate is the short-term rate at which banks lend money to each other overnight. It is not directly tied to long-term mortgage rates, and sometimes mortgage rates go in the opposite direction. For example, when the Fed increased its benchmark rate in December 2015, mortgage rates dropped more than 0.50%, and then gradually increased.
Q. Will the March 15 Fed rate increase lead to an increase in home mortgage interest rates?
A. “Wednesday’s hike [March 15] was widely expected, meaning the markets had already priced it in, so many experts don’t see [mortgage] rates moving much higher in the coming weeks,” according to CNNMoney.