The Federal Reserve begins a scheduled 2-day meeting today during which it which it will vote to leave the Fed Funds Rate unchanged near zero percent. The press will report this as “Fed Holds Rates Steady”. However, don’t confuse this to mean that the Fed held mortgage rates near zero. The Fed doesn’t set mortgage rates. The Fed sets the Fed Funds Rate. By contrast, mortgage rates are based on the price of mortgage-backed securities plus any loan-level pricing adjustments. They’re two very different animals and the chart proves it.
Comparing The Fed Funds Rate To 30-Year Fixed Rate Mortgages
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