The Federal Reserve announced yet another rate hike yesterday so did mortgage rates also increase? No! Average rates for a 30yr fixed rate mortgage fell to 5.99% (the lowest levels since mid-September 2022).
So, why did mortgage rates FALL after the Fed raised rates? Here's 2 main reasons:
#1. The Federal Reserve doesn't control mortgage rates. Instead the Fed adjust the federal funds rate which is the interest rate banks charge each other to borrow money overnight. The Fed Funds Rate may correlate with mortgage rates over long term time horizons, but there can be weeks and even months where they move in opposite directions.
#2: The rate hike by the Fed yesterday was entirely expected. Therefore, it has long since been baked into the rates you see for home loans today.
