Thursday, March 23rd. Why am I smiling when the feds raised rates yesterday and mortgage rates dropped? Let’s just jump into it. Let me explain it. Yesterday, the feds raised rates a quarter of a point. And remember, not a direct impact on mortgage rates. It is a direct impact on the federal funds rate.
Home equity lines of credit, things like that. They thought they were going to raise them a half. The only reason. McCourt Let me tell you why that’s so valuable. Mortgage rates dropped, and there’s a couple of reasons why the mortgage rates dropped when the feds raised rates. Let me explain. Number one, inflation is dropping. You heard me say it.
Mortgage rates fall, inflation. The feds believe that we’re just about towards the tail end of this inflationary thing. We’ll begin to see it continue to get better. Inflation drops, mortgage rates drop. So that’s one of the reasons why they’re potentially erased a quarter instead of a half. Number two, this kind of banking crisis, the Fed indirectly helped perpetuate some of these banking crisis.
And if you want a little bit of a deeper dive on that, reach out to me or your financial planner and they’ll explain it. Sometimes online is not necessarily the right source to go. Number three, they basically said there’s only one more hike coming this year. That’s huge. That means that they believe that inflation is beginning to come down.
And as we begin to see inflation come down, we’ll begin to see interest rates drop. Do you have any questions how this may impact you, a client, friend or family member? Please reach out to me any time. Thanks. Have a great day.