The Federal Reserve has just shared their perspective on the economy – so how does it impact your homebuying process?
Today the Fed increased their target rates by .50%. Importantly, this doesn’t mean that prevailing mortgage rates increased overnight! In fact, average mortgage rates have actually declined since the Fed’s last rate announcement in early November.
The Fed periodically raises and lowers the Fed Funds rate in order to either speed or slow the pace of the overall economy. With inflation continuing to remain above the Fed’s stated goal, they are trying to slow down the economy and bring inflation under control. The Fed’s dual goals are to increase employment rates across the economy, and to maintain low inflation. Today’s action is an effort to get inflation back in line.
The good news is that the pace of inflation has been slowing in recent months. The Fed recognizes this; accordingly today they were able to raise rates by the lowest amount since June, a sign that they are beginning to see results in their fight against inflation. That’s good news for all of us: lower inflation means our dollars go farther every month!
Tracking what the Federal Reserve’s actions might mean for your homebuying decision can be challenging. If you’re thinking about purchasing a home, contact the professionals at First Home Mortgage today to help stay informed!