The latest Federal Reserve meeting suggests mortgage rates will stay low for the foreseeable future

Summary List PlacementAre mortgage rates going up?

Mortgage rates have been a little higher this week than the previous week. But you probably don’t need to worry about rates trending upward overall anytime soon.

Low mortgage rates are usually a sign of a struggling economy, so rates have been low in the US during the coronavirus pandemic. Several factors affect mortgage rates, one being the federal funds rate set by the Federal Reserve.

The federal funds rate is the rate banks charge when they lend to each other. The Fed’s rates affects rates on credit cards, loans, savings accounts, and mortgages.

The Fed’s rate doesn’t impact mortgage rates as strongly as, say, a car loan or CD rate. Mortgage rates also rely heavily on the 10-year Treasury yield and on supply and demand, among other factors. But the federal funds rate does have some influence, and it can indicate how the economy is doing overall — the higher the rate, the better the economy is doing.

The Federal Reserve met on Tuesday and Wednesday last week and decided to keep the federal funds rate at near zero, just as it’s been since the beginning of the coronavirus pandemic. This decision signifies that mortgage rates should stay low for the foreseeable future.

Federal Reserve Chair Jerome Powell said there have been some positive changes as the US economy starts to reopen, such as a rise in inflation. But these short-term bumps don’t affect the economy as strongly as steady, long-term changes.

The Federal Reserve will meet again on June 15 and 16.

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This week’s mortgage rates

Mortgage type
Average rate today
Average rate last week
Average rate last month

15-year fixed
2.48%
2.44%
2.65%

30-year fixed
3.35%
3.31%
3.63%

7/1 ARM
4.31%
4.05%
4.43%

10/1 ARM
4.00%
3.85%
4.73%

All mortgage rates have increased by at …read more

Source:: Businessinsider

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