any people who are buying
a home or refinancing are Now mortgage interest rates,
surprised to learn that, which are determined daily in
when they hear about the Federal active public markets, are often
Reserve Board lowering interest ahead of the Federal Reserve
rates, mortgage rates actually go Board. If these markets
up. How can that be? anticipate a slowdown in the
economy, interest rates can fall.
Well mainly, it’s because we’re That’s because they’re expecting
talking about a different the Federal Reserve Board to
category of interest rates. The lower short-term rates. And as
Federal Reserve Board is dealing you might expect, the opposite
with the Federal Funds rate. This can also occur: mortgage rates
is the interest rate at which can rise well ahead of an
large banks lend funds to one increase in short-term rates by
another in the short-term. the Federal Reserve Board.
Mortgage rates, which can be set One of the most interesting
for up to 30 years, are long-term aspects of all this is that
rates. These long-term rates markets are acting based on how
respond to expectations about they think the Federal Reserve
inflation. When those other Board will decide about the
short-term rates fall, it Federal Funds rate.
encourages greater buying and
spending. This can cause It certainly can be complex! But
inflation. And when there’s at least a little greater
concern about inflation, understanding by consumers of
longer-term rates – mortgage some of the market dynamics just
interest rates, for example – can discussed can be useful in
rise. helping us all become smarter
mortgage shoppers. assist you with. You are the
first priority, and we enjoy
We provide a lot of free getting this important
information via articles, tips information to you.
and our expanding blog. We invite
you to take a look at what we can
About the Author:
Matt Schaub and Silas Ellman started ReallyGreatRate with a simple idea: give every consumer the speed and convenience of online loan service, while providing the most personalized financial solutions available. For more free info, go to Really Great Rate
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