Exhibit A: The Federal Reserve doesn't set mortgage rates.
The Federal Reserve policy-making commttee met for the sixth time this year this week. At its meeting, the independent government group voted “no change” on the Fed Funds Rate by unanimous vote.
You can read the Fed statement here.
At 2:00 PM ET Wednesday, immediately following the announcement, 30-year mortgage rates improved on the belief that the Fed had successfully engineered a soft landing and that inflation was officially done.
Then, Fed Chairman Jerome Powell took the mic and refuted those assumptions.
Summarized, he said:
inflation may be under control (or not)
The economy may enter recession (or not)
More rate hikes may be needed (or not)
The comments caused Wall Street to glitch out. With no clear guidance from the Fed, traders unwound their trades to prepare for additional and unknown risk.
Rates got worse slowly, then quickly. And, by 4:00 PM ET, 30-year mortgage rates were back to their worst levels of the year and approaching a 23-year high.
How bad was it? I issued a retraction.
All this to say: The Federal Reserve's interest rates aren't the same as your mortgage rates as a home buyer. Your mortgage rates can change even when the Fed makes a pause.
You can read more on this topic on the website and watch the full-length video that accompanies it.
The Fed meets again for its next 2-day meeting October 31, 2023. Mortgage rates for buyers will defintely change between now and then.
Happy homebuying,
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