Will the Fed Rate Increase affect Mortgage Rates?


I’m sure you heard the latest news about the Federal Reserve raising their funds rate by 25 basis points (0.25%). THE QUESTION IS, will this directly affect our current mortgage rates? The answer is…No, not really.

MORTGAGE RATES are tied with US Treasury Bonds not the Federal Reserve and although the increase will nudge mortgage rates up, the .25 point increase DOES NOT equal to a .25% increase in mortgage rates.  What does it affect? The Fed rate also influences credit card rates, HELOC loans, some installment loans, and of course, stocks & bonds.  The current mortgage rate for a loan is still roughly about 4%, depending on your credit, etc.  STILL VERY LOW!  The rate increase is a sign our economy is doing better and also keeps inflation running low so let’s keep this in perspective.

I remember when my mom bought her last home in 1989, her interest rate was 8% and she was thrilled! Our rates have been NEAR ZERO for the last several years, take advantage of them before they gradually go up.

Below are the current mortgage rates from my Trusted Lenders at CALIBER HOME LOANS:

Rates as of~12/18/15

For a purchase with great credit, single family home, 500,000 list price~

Conventional 20% down –  4.050%

Conventional 10% down – 4.125% Borrower paid MI

FHA 3.5% down – 3.875%

VA 100% financing – 3.8%

Got a Real Estate related question? Thinking of Buying or Selling? Call or email me anytime. I’m here to help YOU. Cheers to a Merry Christmas & Happy New Year!