Many homebuyers were worried that the recent rate hike by the Federal Reserve will cause mortgage rates to skyrocket. As previously reported, it was then a relief that Chief Economist Sean Becketti at Freddie Mac had stated in a blog that there have been instances in the past, back in mid-2000s, that movements in interest rates did not affect mortgage rates. He also added that the Federal Reserve will make the increases gradual and modest because it is aware that the property market is in a fragile state.
Many are still worried. According Republican American, there are still many homebuyers who feel that the federal rate increase had made them realized that they had delayed home buying for too long. However, their anxiety over the rising mortgage rates due to the federal rate increase is unjustified. Contrary to what was feared, the rates on 30-year mortgages have actually dropped below 4 percent following the federal rate hike. According to experts, mortgage rates are expected to remain under the 4.25 percent mark.
According to the president of Perl Mortgage of Chicago, Ken Perlmutter, if the stock market falls another 300 to 400 points mortgage rates might also drop by one-eighth of a percent. He added that he does not think the mortgage rates will go back to 3.5 percent but he is expects no steep increases.
According to the Chicago Tribune, Zillow economist Svenja Gudell said that worries global economy and the plummeting stock market have pulled 30-year mortgages below 3.8 percent nationwide. This means that mortgage rates actually defy the Federal rate hike.
Following the drop in mortgage rates, James Bianco, president of Bianco Research said that the unforeseen decrease in mortgage rates surprised a lot of people. He said, "I think the Fed wants to get out of the market manipulation game."
As previously reported, movements in the 10-year Treasury bond is rather a better indicator of movement in mortgage rates. Therefore the Federal Reserve does not actually manipulate mortgage rates. However its opinion of growth and inflation somehow has an influence.
