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Mortgage Rates React After Federal Reserve June 2018 Meeting

By Dan Green

The Federal Reserve voted to raise the Fed Funds Rate 25 basis points (0.25%) today, and mortgage rates move to their own rhythm; Today’s mortgage rates, plus a look at the 5-day trend for interest rates; and, the best strategy for shopping for mortgage rates is to remember that rates are random and unpredictable.

Federal Reserve Votes To Raise The Fed Funds Rate

Fed Funds Rate vs 30-Year Fixed Rate Mortgage Rates - Growella
Fed Funds Rate vs 30-Year Fixed Rate Mortgage Rates

The Federal Open Market Committee voted to raise the Fed Funds Rate into a target range near 1.75 percent today. Mortgage rates are reacting.

The Federal Open Market Committee is the rotating, twelve-person sub-group within the Federal Reserve that makes U.S. monetary policy.

Monetary policy acts on the economy like the accelerator and braking pedals act on a car. It speeds things up or slows things down to maintain an optimal pace.

The Fed says that its target rate of growth for the U.S. economy, or inflation rate , is two percent per year. When the Fed measures inflationary pressures above its target rate, it makes moves to slow inflation down.

The Fed’s most well-known tool for affecting inflation rates is the Fed Funds Rate.

The Fed Funds Rate is the rate at which banks lend money to each other overnight and, as the Fed Funds Rate rises, it functions as a brake on the broader economy.

The FOMC vote to raise the Fed Funds Rate, therefore, is meant to slow the U.S. economic expansion and that decision is affecting 30-year mortgage rates along with other home loan products, too.

Mortgage rates are rising.

The Federal Reserve doesn’t set mortgage rates. Wall Street does. Rates are based on the price of mortgage-backed bonds and bonds are sensitive to inflation. When inflation is rising, mortgage rates generally do, too.

The Fed said little to quell concern for inflation through Q3 and Q4 of this year; and, appears on pace raise the Fed Funds Rate at least one more time in 2018.

Today’s Mortgage Rates & Interest Rate Trends

Current mortgage rates - Growella
Current mortgage rates

Mortgage rates are moving higher today.

With the Federal Reserve meeting for its fourth scheduled meeting of the year, pricing is worsening. Rates for fixed-rate and adjustable-rate mortgages (ARM) are higher as compared to earlier in the week.

Rates remain low, however. Many U.S. homeowners with existing FHA mortgages are eligible to refinance and cancel FHA MIP; and home buyers using a 15-year mortgage instead of a 30-year mortgage stand to save 65% on lifetime interest costs.

Here’s a look at today’s pricing:

Mortgage rate quotes are personal and based on more than a dozen factors including credit score, state of residence, and loan size.

Whether you comparison shop makes a difference, too.

Studies prove that shopping with two or more lenders saves up to $2,000 in long-term mortgage costs; and, shopping with four lenders can save four thousand dollars or more.

Get more than one quote when you shop for your loan, every time.

Get Today’s Mortgage Rates

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Lock A Mortgage Rate At The Right Time

The Rules of Locking Mortgage Rates - Growella
The Rules of Locking Mortgage Rates

Comparison shopping your mortgage is smart, but locking your rate at an optimal time is smarter.

Overly aggressive rate shoppers don’t always get today’s lowest rates.

It’s because mortgage rates are unpredictable.

Mortgage rates are based on the price of mortgage-backed bonds and bonds move like stocks — news and unexpected developments can lead to a sharp change in price.

Sometimes, price changes work in your favor; mortgage rates drop. Other times, mortgage rates increase. And, when mortgage rates increase, that’s when your maximum home purchasing power drops and your long-term homeownership costs rise.

You can’t predict or protect against mortgage rates — they’re going to do what they’re going to do. But, you can have a plan.

If the thought of rising mortgage rates makes you uncomfortable, then shop your lenders quickly and lock in with the lender providing your preferred combination of rates, fees, and service.

Otherwise, keep shopping until you’re sure you’ve found the best mortgage deal. It’s a process that could span days.

And, during those days, the broader market may rise or fall, but at least you’ll know that on the day you lock that loan, you’ll be getting the best of what’s around.

Mortgage markets wait for no one.

Written by Dan Green

Dan Green is a mortgage lending expert and the founder of Growella. Prior to Growella, Dan was a six-time, top-producing loan officer; and, ranked repeatedly among the top 1% of loan officers nationwide. Dan's home buying expertise has been in print and on TV with The Wall Street Journal, NPR, Forbes, CNBC, and others.

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