Market Update: Rates Fall; Construction Spending and Fed Interest Rate Decision Coming Up This Week

Blog posted On October 31, 2022

Last week, mortgage rates had their best winning streak in months. One of the factors was a more rate-friendly tone from a Fed member who suggested that the Fed should start discussing its let up on rate hikes. Other helpful factors include the European Central Bank’s friendlier-than-expected announcement and economic data that hinted the Fed’s rate hikes are starting to make their desired effect. Rate-friendly decisions abroad tend to impact domestic rates positively. Domestically, the Fed is waiting for signs from economic data (like cooler inflation) before tapering off its rate hikes. The market eagerly awaits this week’s interest rate decision from the Federal Open Market Committee (FOMC) and subsequential press conference by Fed Chair Jerome Powell.


The FOMC sets the federal funds rate. The federal funds rate will influence mortgage rates but not set them exactly.  When the Fed raises rates, mortgage rates typically go up.  When the Fed lowers rates, mortgage rates typically go down. In each of the past three meetings, the Fed has raised the benchmark interest rate 0.75%. Projections for the upcoming meeting are largely solidified on another 0.75% hike. Perhaps more important to the market is what Fed Chair Powell has to say during his press conference. Many are hoping he gives hints at tapering off the 75-basis-point hikes in December. If the markets feel he does hint at a friendlier rate stance going forward, it could be good news for short-term mortgage rate trends. 

The U.S. construction spending report tracks total spending on private and public construction projects.  In August, total construction spending slipped 0.7%. Higher rates have been impacting costs for many builders.

If you’re concerned about purchasing while rates are, let us know. There are several ways we can help make home buying more affordable in the current market.


Sources: Bloomberg, Mortgage News Daily, Mortgage News Daily