DENVER HOMES TIPS: June 2017

How Does the Fed Affect Mortgage Rates?

This content is courtesy of my AR associate, John Meussner.

How Does the Fed Affect Mortgage Rates?

 

 

     What does the Fed do to mortgage rates?  In the words of the late Edwin Starr, "Absolutely Nothin'".  Yesterday. Janet Yellen announced a .25 increase in the Fed funds rate, and those in the real estate industry seemed quick to scare the pants off of potential home buyers by telling them the Fed is eating into their buying power.

 

     The reality is, the Fed's rate moves have little to no actual or immediate The Fed Raises Mortgage Ratesimpact on the mortgage market.  Like so many other areas of the global economy and geopolitical environment (commodity trading, natural disasters, wars, Brexits, Grexits, and jobs reports), there is a residual and indirect impact, but that's the case with just about everything these days.  What the Fed funds rate does impact is the amount of interest charged to banks borrowing from the Fed & each other.  For this reason, the Fed move has a direct impact on the prime rate (tied to credit cards, lines of credit, and other variable rate debt instruments), so a Fed move will affect things there, but the impact is nowhere even close to the impact that would be felt if that could unilaterally increase mortgage rates by .25 with the wave of a wand.

 

     To illustrate this further, let's look at what happened when the Fed made their announcement.  Mortgage bonds improved more than they have in months (on a single day basis), and mortgage rates actually dropped by nearly .25.  So while fear mongering agents and ignorant mortgage "professionals" are telling people how much their buying power will be hurt, buying power actually improved immediately.  

 

     The problem with selling fear is that for every person that buys into it, there's another who sees right through you, and thinks you either ignorant, or worse, a crook.  So if you're spouting off these warnings with false information, which are you?  

 

     The reality of the marketplace is rates are heading up and it doesn't look like that trend is stopping any time soon.  So go ahead and spread the word, discuss decreases in buying power, and why it's important to buy now (if you think it is).  But don't blame the Fed.  Blame inflation.  Blame a roaring economy and jobs numbers that haven't looked so good since the 70's.  Blame it on a rolling back of regulations and a more business-friendly administration.  Blame it on something that, in reality, is having a direct effect on the rates.  But don't go fear mongering over the Fed, because in doing so, you're wrong.  Your information is wrong, and spreading it around for personal benefit makes you either ignorant, or a crook. 

John Meussner

NMLS# 138061

Visit My Website!

 

share buttons 
denver homes
(303) 514-4000
About

newsletternewsletterblog iconfacebookflickrlinkedintwitternewsletteremail

   Buy A House     Sell A House     New Homes      Foreclosure Help     First-Time Buyers  

Copyright © Michael Dagner and www.DenverHomesOnline.com. All rights reserved.  Attribution: flickr/photos/unquiet (creative commons-NoDerivs 2.0 Generic (CC BY-ND 2.0)

Comment balloon 2 commentsMichael Dagner • June 29 2017 05:25AM
How Does the Fed Affect Mortgage Rates?
share
This content is courtesy of my AR associate, John Meussner. How Does the Fed Affect Mortgage Rates? What does the Fed do to mortgage rates? In the words of the late Edwin Starr, "Absolutely Nothin'". Yesterday. Janet Yellen… more
Cutting the Ties with the Family Home
share
This content is courtesy of my AR associate, Debbie Reynolds. Sellers and Helping Them Cope with the Stress of Moving People get very attached to their homes. Though their heads tell them it is time to go and move on, their hearts are on the verge… more
HOW TO SELL YOUR TENANT OCCUPIED HOME
share
This content is courtesy of my AR associate, Beth Atalay. HOW TO SELL YOUR TENANT OCCUPIED HOME If your Tenant has something to gain from the sale of the house, they would be more willing to cooperate showing it. Think of ways to motivate them! If… more
Woman slams Staple Gun into Intruder's Head
share
This content is courtesy of my AR associate, Robert Siciliano. If you’re ever confronted by an assailant in your garage, you may have any number of highly effective weapons within your reach. A woman in Indianapolis identified as Carol found that… more
Denver Events - July 7th - 9th 2017
share
DENVER EVENTS THIS WEEK July 7th - 9th 2017 Here's some of the most popular Denver Events going on in Denver this week: July 7th - 9th The Avett Bros - Red Rocks Biergarten Fest Colorado Black Arts Festival Luzia - Cirque Du Soleil City… more
Denver Events - June 26th - 30th 2017
share
DENVER EVENTS THIS WEEK June 26th - 30th 2017 Here's some of the most popular Denver Events going on in Denver this week: June 26th - 30th The Fray Paul Simon Bike To Work Day The Planets w/ The Colorado Symphony The Eightys Band SEE… more
Denver Events - June 19th - 25th 2017
share
DENVER EVENTS THIS WEEK June 19th - 25th 2017 Here's some of the most popular Denver Events going on in Denver this week: June 19th - 25th Westword Music Showcase Denver's Annual Used Book Fair Greeley Stampede & Rodeo 16th Street Fair… more
Denver Events - June 12th - 18th 2017
share
DENVER EVENTS THIS WEEK June 12th - 18th 2017 Here's some of the most popular Denver Events going on in Denver this week: June 12th - 18th FREE Day - Botanic Gardens Do At The Zoo Juneteenth Festival 1940's Ball PrideFest Denver SEE… more
Denver Events - June 5th - 11th 2017
share
DENVER EVENTS THIS WEEK June 5th - 11th 2017 Here's some of the most popular Denver Events going on in Denver this week: June 5th - 11th Film On The Rocks FREE Day Children's Museum Dead & Co Pinball & Arcade Festival Colorado… more