What Will The Fed Do to Mortgage Rates?

What will the Fed do to mortgage rates?  This is actually a bit of a trick question.  The Fed doesn’t set mortgage rates.  The Fed’s policy rate applies to overnight loans between large financial institutions.   The only way it directly influences mortgage rates is by serving as the basis for the PRIME rate.  Home equity lines of credit (HELOCs) are often based on the Prime Rate. 
For all other mortgage rates, charting a connection to the Fed Funds Rate is significantly more challenging.  Indeed, there are many examples of mortgage rates moving in the opposite direction.  In other words, mortgage rates have often fallen after a Fed rate hike and vice versa.  …(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.
Source: mortgagenewsdaily.comNew feed