Arcadia Chamber of Commerce - The Connection to the Business Community

In the News: Fed Raises Rates – Notes from Tracy Shaw of Prestige Capital

The Federal Reserve raised interest rates a quarter point last week in a unanimous vote, marking the first rate hike in three years. This brings the central bank’s benchmark lending rate to a range of 3.75%-4%, in an effort to lower inflation. The majority of FOMC members voting have projected one more rate hike this year in their notes released after the meeting.

While this does not have a direct effect on long-term mortgage loans, we expect to see rate changes on adjustable-rate mortgages (ARMs) and home equity line of credit loans (HELOCs).

Long-term mortgages – such as the 30-year fixed-rate – are more closely tied to the 10-year Treasury yield. Rising inflation, global tension, and ballooning government debt have caused a sell-off in the bond market in recent weeks. This triggered a rise in bond yields, and in turn, mortgage rates crept up.

Following the Federal Reserve’s meeting, bond yields rose to 5%, causing long-term mortgage rates to rise again. Freddie Mac reported the national average on 30-year fixed-rate mortgages at 6.95% as of September 17th. This is up from one year ago, when the 30-year FRM averaged 6.26%.

While the US Treasury announced an aggressive buyback plan through November 4th, we have yet to see concrete positive results in terms of lower mortgage interest rates.

Now more than ever, it is essential to have a qualified, licensed loan originator guide you through the intricacies of mortgage planning.

My team and I have our eyes on the market at all times in an effort to lock in the best rates for our clients, based upon their unique needs. Give me a call if you have any questions about home purchase or investment property loans, refinance options, or how to leverage your built-up equity. We’re looking out for you!

Best regards,

Tracy Shaw
President & Chief Lending Advisor
NMLS # 913749 | CalBRE # 01894272