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Blog posted On March 26, 2024
The Federal Open Market Committee (FOMC) voted to leave the benchmark interest rate untouched last week. Following the news, mortgage rates trended lower. Read why.
Last week’s rate movement
First, the Fed doesn’t directly set mortgage rates. The federal funds rate is just a general benchmark number for the cost of borrowing money. What impacts mortgage rates more is the strength of the bond market. Generally, the stronger the bond market, the lower the mortgage rate trends.
In the most recent Fed meeting, the bond market wasn’t really focused on the Fed’s decision to leave rates unchanged. Instead, it had its sights set ahead for future rate cut projections. “In not so many words, those projections retained the Fed's previous expectation of 3 rate cuts by the end of this year, albeit by a smaller margin than the last round of projections in December,” wrote Matthew Graham of Mortgage News Daily. “This was a bit more hopeful than markets expected. As such, bonds improved, and mortgage rates fell.”
This morning’s home price news
The monthly 20-city Case-Shiller increase brought the index’s levels to a new high. “Home prices in the 20 biggest U.S. metros hit a new high as the housing market deals with an ongoing lack of homes for sale,” noted MarketWatch.
Reach out for more info & buyer strategies in the current market.
Sources: Bloomberg, MarketWatch, Mortgage News Daily