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Federal Reserve Announces Rate Hike
In a highly anticipated move, the Federal Reserve announced that it increased the target range for the federal funds rate by .250% to .750% to 1.000%. The Fed highlighted a strong labor market and increased household spending in explaining the rake hike. Most industry observers expected a rate increase to come out of the March meeting after the Fed indicated in January that it could be “appropriate to raise the federal funds rate again fairly soon” depending on how inflation and the labor market performed. Last week’s robust jobs report all but guaranteed the Fed’s decision to raise rates. In a related announcement, the Fed also increased the primary credit rate (discount rate) by 0.250% to 1.500%. We provide a link to the full Federal Reserve announcement.
Mortgage rates are relatively unchanged in response to the Fed’s announcement as rates had already spiked .125% to .375% last week in reaction to the strong jobs figures. Most lenders had already factored the rate hike into their mortgage rate pricing coming into the week as rates touched new highs for 2017. The interest rate for a 30 year fixed rate mortgage jumped .250% to 4.125% while the interest rate for a 15 year mortgage also increased .250% to 3.250%. The interest rate on a 5/1 adjustable rate mortgage (ARM) edged .125% higher to 3.000%.
Although VA and FHA mortgage rates continue to be attractive for home buyers seeking low down payment options, they were not exempt from the rising interest rate tide. VA mortgage rates increased .250% to 3.625% while FHA rates climbed higher to 3.750%. Jumbo mortgage rates and non-owner occupied rate also increased to 4.250% and 4.375%, respectively.
After drifting lower for most of 2017, mortgage rates have rebounded as the economic momentum appears to be building. Although interest rates are impossible to predict, the Fed’s decision to raise rates along with its more aggressive commentary signal that mortgage rates will continue to rise over the course of 2017, potentially at an accelerated pace. Prospective borrowers looking to buy a home or refinance may be able to lock in a lower interest rate by acting sooner rather than later, before mortgage rates go up again.
Because interest rates are unpredictable we continue to actively monitor mortgage rates for changes. Borrowers should check the FREEandCLEAR mortgage rate tables regularly to review customized, updated mortgage rates for lenders in their area. Our rate tables are free to use and require no personal information.