POST TAGSMarket Updates
Blog posted On March 27, 2023
Mortgage rates took a sharp downward trend last week after the Federal Reserve’s decision and press conference about the benchmark interest rate. The benchmark interest rate, or federal funds rate is the target interest rate for banks and depository institutions. The Fed sets the range of the federal funds rate and uses it as a tool to help stabilize the economy. While the benchmark interest rate doesn’t directly set mortgage rates, it can influence their movement. Even more of an influencing factor is the language surrounding the benchmark rate and overall economic outlook.
In a statement last Wednesday, the Fed announced it was raising the benchmark interest rate by 0.25%. This move was widely expected by the markets. This wasn’t the most important part of the day. That came with Fed Chair Powell’s press conference. During the conference, Powell talked about upcoming tightening due to the recent banking events, which can shape economic momentum. This is the comment the markets honed in on that consequently pushed rate trends lower. Here’s why:
“Long story short, in spite of the Fed rate hike and the relatively unchanged outlook for 2024, the market saw some indication of a policy pivot in Powell's comments – some shifting of the big picture cycle of economic growth and inflation,” writes Matthew Graham of Mortgage News Daily.
At the end of this week, we’ll get the lowdown on recent inflation data from the PCE index, consumer spending, and personal income reports on Friday.
If you would like to discuss your rate lock options while rates are trending lower, let us know! We offer various lock products that include a float down option if rates fall further.