$\"Myth$ \n

You\u2019ve probably heard the Federal Reserve<\/em> (the Fed) is raising rates again. And if you\u2019re planning to buy or sell a house, you may be wondering what that means for you.<\/p>\n

With all the headlines, it\u2019s easy to think the Fed sets mortgage rates<\/a>. That\u2019s actually a common myth. But the Fed\u2019s decisions can still have an impact on them.<\/p>\n

So, where does that leave you? The next few months could get a little bumpy. But the Fed is playing the long game. And with the right plan, you can still make a move that works. Let\u2019s break it down.<\/p>\n

Why the Fed Is Raising Rates<\/strong><\/h4>\n
It all comes back to inflation. With prices rising fast, everything is getting more expensive \u2013 and that leaves buyers with less spending power and makes homes cost more to build.<\/p>\n
So, the Fed raises its key short-term rate (the Federal Funds Rate) to slow down inflation. And that\u2019s where a lot of people get tripped up.<\/p>\n
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MYTH:<\/strong> The Fed controls mortgage rates.<\/p>\n<\/li>\n
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REALITY:<\/strong> The Fed has an impact on mortgage rates, but it\u2019s only one piece of the puzzle.<\/p>\n<\/li>\n<\/ul>\n
As NerdWallet <\/em>explains:<\/p>\n
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\u201c<\/em>The Federal Reserve influences mortgage rates, but doesn\u2019t set them. . .<\/em><\/strong> Mortgage rates are influenced by many elements, including the inflation rate, the pace of job creation, and whether the economy is growing or shrinking. The Federal Reserve\u2019s monetary policy is a factor, too . . .\u201d<\/em><\/p>\n<\/blockquote>\n
Here\u2019s the simplest way to explain how it all fits together. Mortgage rates tend to follow something called the 10-year treasury yield. That\u2019s the return investors get for lending money to the government for 10 years. And that yield moves up and down based on what investors expect from inflation and the economy.<\/p>\n
Right now, one of the biggest things moving that yield is the conflict in Iran. It\u2019s pushed oil prices higher, which has investors worried about inflation. That\u2019s why any news about the conflict can move mortgage rates. If there\u2019s resolution in Iran, that could take some pressure off inflation and mortgage rates. But the timing is hard to predict.<\/p>\n
What the Fed does can move that yield, too. When they hike the Federal Funds Rate to fight inflation, investors pay attention. That can push the 10-year yield up, and mortgage rates usually follow. But once inflation cools, the yield has room to come back down, and mortgage rates can, too. That gives buyers some of their purchasing power back (see graphic below<\/em>):<\/p>\n
$\"a$ <\/p>\n
Think of it as a little pain today to set up some relief down the road. But how long could that short-term pain last? A lot depends on what the Fed does next.<\/p>\n
There\u2019s a Strong Possibility the Fed Will Hike Again This Year<\/strong><\/h4>\nAccording<\/a> to CME FedWatch<\/em>, there\u2019s over an 80% chance the Fed hikes their federal funds rate at least once more before the end of 2026 (see graph below<\/em>):<\/p>\n
$\"a$ <\/p>\n
Remember, the Fed doesn\u2019t set mortgage rates. But another hike will likely keep upward pressure on them in the short term. So, should you wait it out? Sam Williamson, Senior Economist at First American<\/em>, says<\/a> this:<\/p>\n
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\u201cOver time, firmer Fed action could help steady the bond market and open the door to lower mortgage rates, <\/em>but only if investors become more confident that inflation is coming under control.<\/em><\/strong>\u201c<\/em><\/p>\n<\/blockquote>\n
And there are some early signs that\u2019s starting to happen. Inflation cooled faster than experts expected in August:<\/p>\n
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PCE inflation<\/strong><\/a> dropped to 3.4%, down from 3.7% in July.<\/p>\n<\/li>\n
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Core PCE<\/strong><\/a> (the Fed\u2019s preferred measure which leaves out food and energy prices) fell to 3%, down from 3.3%.<\/p>\n<\/li>\n<\/ul>\n
That\u2019s a step in the right direction, and it\u2019s part of why the odds of a hike at the Fed\u2019s October meeting have come down recently. But inflation\u2019s still above the Fed\u2019s 2% target, and it\u2019s been that way for about 5 years. So, lower rates could still take a while. Your best bet is a plan that works at today\u2019s rates.<\/p>\n
How To Make Your Move Work Right Now<\/strong><\/h4>\n
While this rate hike cycle isn\u2019t the headline you want to see, it doesn\u2019t mean you have to wait. There are still ways to move, even now.<\/p>\n
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If you\u2019re buying:<\/strong> Get pre-approved<\/a> so you know your real budget. Ask your lender about your options to get the best rate possible<\/a>. And once you\u2019re under contract, lock your rate so a jump before closing doesn\u2019t raise your payment.<\/p>\n<\/li>\n
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If you\u2019re selling:<\/strong> Decide what matters most to you \u2013 a quick sale or top dollar. Each one can call for a different plan. Price<\/a> for today\u2019s buyers, whose budgets are smaller with higher rates. And think about offering a rate buydown or other concession. They can do more for a buyer\u2019s budget than a price cut.<\/p>\n<\/li>\n<\/ul>\n
Bottom Line<\/h3>\n
The Fed doesn\u2019t set mortgage rates, but its hikes can keep them higher for a while. The goal is to bring inflation, and eventually rates, down over time. With more hikes likely this year, waiting may not pay off. So, connect with a local real estate agent to map out a plan that works at today\u2019s rates.<\/p>\n<\/div>\n\n<\/body>","protected":false},"excerpt":{"rendered":"
You\u2019ve probably heard the Federal Reserve (the Fed) is raising rates again. And if you\u2019re planning to buy or sell a house, you may be wondering what that means for you. With all the headlines, it\u2019s easy to think the Fed sets mortgage rates. That\u2019s actually a common myth. But the Fed\u2019s decisions can still […]<\/p>\n","protected":false},"author":1,"featured_media":6708,"comment_status":"registered_only","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[12],"tags":[29,27,20,18,28],"class_list":["post-6707","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-insight","tag-idaho-real-estate","tag-north-idaho-homes","tag-rain-silverhawk","tag-real-estate","tag-sandpoint-idaho"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t