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How the recent fed rate hikes affect interest rates


"The Fed’s key short-term rate affects 30-year mortgages and other long-term rates only indirectly. Those rates correlate more closely with inflation expectations and the long-term economic outlook.

The average 30-year fixed mortgage rate already has climbed from 4.15 percent to 4.54 percent since Jan. 1 largely because investors expect federal tax cuts and spending increases to push inflation higher. But the rate is down from a recent high of 4.66 percent in late May. The likely rate hike on Wednesday is already figured into mortgage rates.

For home buyers, any impact on the monthly bill would probably be relatively small. By year’s end, a quarter-point rate increase on a $200,000 mortgage would boost the monthly payment by about $30.

Existing fixed-rate mortgages are not affected.

Other Fed moves could also play a role. In September, the Fed announced that it’s gradually shrinking the bond portfolio it amassed during and after the financial crisis in a bid to lower long-term rates. That likely has a greater effect on fixed mortgage rates, according to Tendayi Kapfidze, chief economist of LendingTree."

Check out the full article here: https://www.usatoday.com/story/money/2018/06/13/fed-rate-hike-impact-savings-loans/693886002/

Shamez Pirani