The Federal Reserve announced Wednesday that it will begin unwinding its massive balance sheet beginning in October, a move that could push up longer-term mortgage rates.
Also, as widely expected, the central bank’s Federal Open Market Committee (FOMC) left the target federal funds rate unchanged at the conclusion of its two-day meeting this week, setting the stage for a possible rate hike in December.
In its other major decision, Fed policymakers left the benchmark rate unchanged in the range of 1 to 1.25 percent. Fratantoni said the Fed’s statement was “relatively hawkish,” suggesting a rate hike in December, and possibly three or four increases each year until the fund target range hits 3 percent.
Mike Fratantoni, chief economist for the Mortgage Bankers Association, explained. “Even though inflation remains relatively low, the tight job market is leading the Fed to slowly move rates up to prevent the economy from overheating.” Suggesting a rate hike in December, and possibly three or four increases each year until the fund target range hits 3 percent.
Most analysts have predicted the FOMC will raise the rate by a quarter percent at least one more time this year. The most likely date is following the Dec. 12-13 FOMC meeting, for which Yellen has scheduled a news conference. The FOMC also has a two-day meeting slated for Oct. 31 and Nov. 1.
Rates September 21, 2017
30-year fixed-rate mortgage (FRM) averaged 3.83 percent with an average 0.5 point for the week ending September 21, 2017, up from last week when it averaged 3.78 percent. A year ago at this time, the 30-year FRM averaged 3.48 percent.
15-year FRM this week averaged 3.13 percent with an average 0.5 point, up from last week when it averaged 3.08 percent. A year ago at this time, the 15-year FRM averaged 2.76 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.17 percent this week with an average 0.4 point, up from last week when it averaged 3.13 percent. A year ago at this time, the 5-year ARM averaged 2.80 percent.
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