The Federal Reserve decided not to raise rates at their September 20-21 meeting, citing a lack of inflation and point out that the overall economy is moving at a steady pace and not overheating. The vote was 7-3 within the Fed not to raise rates. While there were some strong opinions from the three Fed presidents in favor of a rate hike, Chairwoman Janet Yellen cited that employment was in check and there was not a need at this time to make a move.
The futures markets had only placed a 12 percent chance that the Fed would raise rates at this meeting and now are setting their eyes on the December meeting to see if that will be the magic month, just as it was last year. Chairwomen Yellen stated in her comments after the meeting that the decision to make a move in December will be dependent on the economic data in October and November.
As it stands now, rates are approximately at 3.5 percent for a 30 year, 3.25 percent for a 20 year and 2.875 percent for a 15 year fixed. While mortgage rates do not move exactly as the rate controlled by the Fed does, we should see a move higher in mortgage rates if the Fed does raise rates in December.
There are a lot of insiders saying that we should have rates much higher at this point in time, while other are beginning to call this era of low rates the new normal.
Home buyers and owners should take advantage of these rates if they are in the market for a new home or if they need to refinance at this time. It is tough to say what the market will do in the coming months, but one thing is certain: We are living in some interesting times.
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