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Mortgage rates stabilized and continue to remain near their low for the year despite the Federal Reserve's decision to raise the its key federal funds rate .250% in its June meeting.  The Fed pointed to labor market strength as well as improved household spending and business investment in deciding to raise the target range for the federal funds rate to 1.000% to 1.250%.  The Fed also noted relatively low inflation, including a recent decline, in explaining its decision to raise its target interest rate.

Perhaps because the Fed's rate hike action was so widely anticipated, mortgage rates were mostly unchanged following the Fed's announcement, which is certainly a relief for borrowers as purchase and refinance activity continues to gain momentum.

Instead of following the Fed's lead and climbing, mortgage rates were stable across the board as compared to last week.  The interest rate for a 30 year fixed rate mortgage remained at 3.750% while the interest rate for a 15 year mortgage held steady at 2.750%.  The interest rate on a 5/1 adjustable rate mortgage (ARM) also stayed put at a low 2.750% as lenders seek to pull borrowers into shorter-termed loan products.  FHA and VA mortgage rates were both unchanged at 3.250%, remaining appealing for home buyers seeking low down payment loan options.

Bucking the trend, Jumbo mortgage rates increased .125% to 3.875% and non-owner occupied also rose .125% to 4.125%.

After a relatively turbulent first quarter of 2017, mortgage rates have been relatively stable and attractive for much of the past two months.  The trend looks to continue as we move deeper into June, especially in light of mortgage rates' non-reaction to the Fed'smove.  We are approaching six weeks of relatively stable mortgage rates that have brought a sense of calm and increased certainty to the marketplace for both borrowers and lenders. 

Although recent events reinforce that mortgage rates are impossible to predict, the Fed’s decision to increase the Fed Funds rate and the pullback in mortgage rates over the past month does not change the expectation that rates are likely to rise over the course of 2017, potentially at an accelerated pace.  In fact, the Fed reaffirmed its outlook for one more rate increase in 2017.  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 fluctuate daily, we continue to actively monitor the mortgage marketplace 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.