The probability of the Fed raising the federal funds rate by three quarters of a percentage point (75 basis points) this afternoon has jumped from under 10 percent last week to over 95 percent today, based on an analysis of the futures market. As such, the benchmark 30-year mortgage rate, which has already rocketed by over 200 basis points in under 6 months to a 12-year high, is not only poised to climb but to spike again.
As we foreshadowed at the end of last year, higher mortgage rates are translating into less purchasing power for buyers, fewer sales and downward pressure on home values.
And on top of today’s projected rate hike, the probability of the Federal Reserve raising interest rates by an additional two (2) full percentage points by the end of the year is nearing 95 percent as well. We’ll keep you posted and plugged-in.
UPDATE: As projected, the Fed voted to raise the federal funds rate by three quarters of a point, representing the first 75 basis point hike in nearly 30 years.