What will another interest hike mean for mortgage rates?

financial markets | mortgage rate news

What’s expected from the Federal Reserve meeting?

According to the team at CNBC, the expectation on the street is that the Federal Reserve will raise interest rates one-quarter of a percentage point at this week’s policy meeting. This is considered a more moderate pace compared to the previous rate hikes over the past year. According to assistant finance professor at Columbia University Business School, Yiming Ma, “the good news is the worst is over.” Ma also stated that while inflation is still above the Fed’s 2% long term target, pricing pressures have “come down substantially and the pace of rate hikes is going to slow.

What does the interest rate hike mean for mortgages? 15-year and 30-year mortgage rates are fixed and tied to treasury yields and the economy, so there isn’t a direct impact. However, treasury yields are affected by interest rates, and those do help set mortgage rates.

When asked about the direction of mortgage rates, senior economist Jacob Channel said, “Mortgage rates could actually remain where they are over the coming weeks or even continue to trend down slightly.”

Where did mortgage rates start the week?

With so much data and multiple announcements expected this week, Monday’s session was sideways for most of the day and the national average for a 30-year, fixed-rate mortgage ended at 6.21% up 0.01% compared to where it ended last week.

Traders are in the middle of earnings season for stocks, the market is getting a major announcement from the Fed, and employment and inflation data are also expected. The market has the potential for volatility with the amount of new information and guidance expected this week.

Could New York’s plan to add housing work?

The New York state legislature has a plan to add 800,000 new homes throughout the state over the next 10 years. However, the plan has run into a few obstacles. The biggest hurdle to clear appears to be suburban neighborhoods and a lack of willingness to add additional homes to specific areas. Detractors of the plan cited congestion and overcrowding as their reason for leaving New York City and moving to places like Westchester County and the Hudson Valley.

The plan, if enacted, would set housing production targets for every city, town, or village and give the state the power to approve housing developments if the municipalities miss their quota. Most local governments don’t want to give up that much control to the state.

The good news is that politicians from both sides of the aisle recognize the need for additional housing. It seems like figuring out where to build and how fast are the two major stumbling blocks that need to be solved.

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