Is the Federal Reserve Raising Interest Rates?
Is the Federal Reserve going to RAISE interest rates?! Not directly because the Fed doesn't set home loan rates! Watch the video to learn more or read the video transcript, found below.
I see so many social media posts, usually from real estate agents, talking about how the Federal Reserve is going to raise home loan interest rates. News Flash! That’s not how it works! The interest rate the Fed sets is the Fed Funds Rate. This is not the home loan rate. Sure, the fed funds rate generally impacts a wide variety of interest rates, including home loan rates. But did you realize the since the Great Recession, the Fed Funds rate has barely moved, yet home loan rates have ranged from under 3% to a little over 5%. Go back and look at 2004 to 2006 and you’ll find the Fed Funds rate increased from 1% to 5.25%, yet home loan rates stayed in the narrow range of 5.25% to 6.25%. So yes, home loan interest rates are going up this year, but understand that when you hear the Fed is raising interest rates, that it doesn’t mean home loan rates. I’m Craig Smyser with 1835 Realty.