Mortgage Rates Expected to Fall After Fed Decision

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Fed comes out dovish

At the conclusion of the Federal Open Market Committee’s two-day meeting, policymakers decided to keep the Federal Reserve’s benchmark interest rate unchanged at 0.25%-0.5%. The decision was unanimous, with even the hawkish Esther George voting to keep things where they are.

While no one had expected the Fed to raise rates at this meeting (thanks to the dismal May jobs report), many onlookers did expect a slightly more hawkish tone. In particular, it was surprising to find that the “dot plot” now shows six officials expect only one rate hike in 2016. That’s up from one at the March meeting.

The Fed’s statement noted that “the pace of improvement in the labor market has slowed” and that job gains have diminished” and offered up no concrete timeline for when rates will rise.

Click here to get today’s latest mortgage rates.

Janet Yellen Press Conference

Janet Yellen must have said variations of the word “uncertainty” upwards of twenty times at the post-meeting presser. She made it very clear that economic predictions, such as the kind Fed officials habitually offer up, are very hard to make in an accurate manner due to all of the unknowns at play.

While there are no doubt many uncertainties at play in the domestic and global markets, her remarks still came off a bit defensive. Of course, I’d probably be defensive too if I had predicted 3-4 rate hikes at the beginning of the year, and now we’re left with a 50/50 shot at one.

Aside from the weak labor market data, Janet Yellen did admit that the concerns over the U.K.’s Brexit referendum played a part if the Fed’s decision to keep rates unchanged. She also noted that a July rate hike is “not impossible”.

She also noted that a July rate hike is “not impossible”. That might be theoretically true, but in reality, the odds of it happening are slim to none. Right now, December is the most likely candidate for the next rate hike.

Click here to get today’s latest mortgage rates.

What does this mean for mortgage rates?

Mortgage rates are staying low for a while longer. The yield on the U.S. 10-year Treasury note fell to levels not seen since 2012 after the Fed’s statement was released. Mortgage rates have a tendency to follow the path of the 10-year yield, so it’s very likely that we’ll see rates drop. Last week’s Freddie Mac PMMS had rates just above the lowest levels of the year. I wouldn’t be surprised if tomorrow the PMMS reveals new 2016 lows.

All this is to say that it’s a great time to buy or refinance and lock in a low rate for years to come.

Rates are still near record lows.  Contact us today to see if we can save you money on your home payments.

from Total Mortgage Underwritings Blog http://ift.tt/1Ua6ZA3