According to an analysis of the futures market by the CME Group, the probability that the Fed will hike interest rates tomorrow currently stands at 23 percent with the probability of a rate hike increasing to 63 percent in December.
If the market is correct, the rate hike will total a quarter-point by the end of the year versus a half-point increase as expected a few months ago. But the impact of that quarter-point should still be enough to help drive mortgage rates back above the 4 percent mark for a conforming 30-year loan.
UPDATE: Our original piece did not differentiate between the odds of a quarter or half-point rate hike by the end of the year. While the probability of a hike remains at 63 percent, the odds are against a half-point hike (the probability for which is currently around 19 percent).
UPDATE (9/17): As predicted, the Fed has announced that it will not be raising The Fed Funds rate this month, citing “recent global economic and financial developments” which may restrain economic activity in the near term.
The probability of a rate hike in December has dropped to 53 percent.