Today the Federal Open Market Committee increased the Federal Funds rate by .75%. The federal funds rate is the target interest rate set by the Fed at which commercial banks borrow and lend their extra reserves to one another overnight.
The Fed Funds Rate
The Federal Reserve does not set mortgage rates, and the central bank’s decisions don’t drive mortgage rates as directly as they do other products, like savings accounts and CD rates.
The Fed Funds Rate is a very short-term instrument. It does have an impact on mortgage rates, but is not a direct correlation. Mortgage rates are determined by treasury yields and economic data, and are typically set with a 60-day lock period. Therefore, they predict, or attempt to predict, where the rates will be in those 60 days.
Prior to today’s Federal Reserve meeting, it was anticipated that the Fed would raise the Fed Funds rate .75%. As this was no surprise to the markets, it has very little immediate impact on interest rates. If they would have only raised .5%, rates may have fallen. If more, they would increase dramatically. It is when the Fed catches the markets off guard that it has the greatest impact.
We are anticipating two more increases from the Fed in the next 2 meetings, but we will have to wait and see how the markets react in the interim, and how transparent they are with future decisions.
Building a New Home in 2022
Those looking to build a new home in 2022 can move forward with confidence that they can still get their custom home at a reasonable mortgage. Although the inflation of 2022 has caused concern nationwide, homebuyers can still gain the type of home they want without reason to fear. Shore-Line Construction builds custom homes on the Maryland waterfront and is happy to work with you on your custom waterfront home build.
The information above we received from our lending advisor and thought we should pass it along to those thinking of purchasing or building a new home. Thank you for your interest in building with us!
BUILD YOUR WATERFRONT DREAM HOME WITH SHORE-LINE CONSTRUCTION!
At Shore-Line Construction, we know that your home is a reflection of you. That’s why we strive to make each home we build as beautiful as the family who will live there. We work with each of our clients to design a home that fits their needs. The end result is a durable, energy-efficient custom home that the family will enjoy for generations to come. Shore-Line Construction has been serving our customers for over 25 years, and we look forward to the opportunity to help you!
If you’re interested in learning more about what Shore-Line Construction can do for you, check out our website or give us a call at 410-574-6623. Keep up with all of the latest news by following our blog and social media pages on Facebook, YouTube, Pinterest, and Houzz!