The Federal Reserve hiked rates by 0.75% this past week and 30yr fixed mortgage rates moved moderately higher. Interestingly enough, those two things are fairly unrelated.
The Fed Funds Rate (the thing the Fed “hikes” when you hear about the Fed hiking rates) applies to overnight loans among large financial institutions. It’s important, to be sure, but it only changes 8 times a year whereas securities in the bond market change every second of the day.

There are all kinds of bonds. US Treasuries are the quintessential example. The yield on a 10yr US Treasury is the most popular benchmark for longer-term interest rates in the world. There are bonds that underlie the mortgage market as well (MBS or mortgage-backed-securities). They tend to move a lot like US Treasuries. There are even bonds that traders use to bet on the future level of the Fed Funds Rate (incidentally called “Fed Funds Futures”).

With that in mind, the bond market has LONG since assumed the Fed would hike 0.75% this week. The Fed Funds Futures contract for November was locked into the new rate since late last week and first reached that level in mid September after the CPI inflation data.

All that to say that new of a 0.75% rate hike isn’t really news. Markets have known and had already adjusted. In fact, when the hike was announced, rates actually IMPROVED for several minutes. To learn more about a New Mortgage Loan phone Dan at 866-310-1112