As predicted, the Federal Reserve has just raised its benchmark Federal Funds rate, upping its target range by another 0.25 percent (25 basis points) and signaling accelerated expectations for two more quarter-point increases by the end of this year, which is one more than previously expected.
The Fed dropped the benchmark rate five (5) percentage points between August of 2007 and the end of 2008, a move which helped drive mortgage rates down to an all-time low of 3.31 percent in 2012. The Fed has since raised its target by a total of 1.75 percent.
The yield on 10-year Treasury notes, which drives the 30-year mortgage rate, is currently trading up a basis point or two since the Fed’s announcement. And as of last week, the average rate for a 30-year mortgage was running around 4.56 percent with the probability of a rate hike today already priced-in.