The Fed hikes rates again. How did markets react?

Federal reserve bank | mortgage rate news

The Fed hikes interest rates 75-bps

As expected, the Federal Reserve hiked interest rates 75-bps on Wednesday. The latest interest rate hike has pushed rates to 3.75%-to-4.00%. That’s the highest interest rates have been since 2008.

The Fed also provided additional commentary that indicated that additional rate hikes were likely, but the size and pace may be adjusted based on inflation data that comes out ahead of the next FOMC meeting in December.

How did mortgage rates react to the Fed?

A 30-year fixed mortgage rate ended the day at 7.12%, up slightly for the day. Mortgage rates had dipped a little in early trading, but slowly crept back up throughout the day and ended higher.

While home buyers likely aren’t thrilled with the direction that mortgage rates went after the announcement, this rate hike from the Fed didn’t cause the mortgage market to spike as much as the previous hikes did.

Were there specific comments from the Fed on housing?

Federal Reserve Chairman Jerome Powell provided comments on several aspects of the economy on Wednesday. However, some of his most pointed remarks were focused on the housing sector. Powell stated that, “(the) housing market needs to get back into balance,” but also claimed that, “we don’t see financial stability issues from the housing sector.” He did also acknowledge that “housing was significantly impacted by higher rates.”

It’s clear that the housing sector is one of the areas of focus for the Fed and should continue to get additional attention.

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