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 expectations for another quarter-point increase by the end of the year.

The Fed dropped the benchmark rate a total of five (5) percentage points between August of 2007 and the end of 2008, a move which helped drive the 30-year mortgage rate down to an all-time low of 3.31 percent in 2012. The Fed has since raised its target by a total of 2.0 percent and the benchmark mortgage rate is back up to 4.65 percent, an effective 7-year high.

The yield on 10-year Treasury notes, which drives the 30-year mortgage rate, is currently trading within a narrow band of where it started the day with the probability of a rate hike already priced-in.

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