The Fed’s Dovish Position Stopped a
Mortgage Interest Rates are tied very closely with the interest rates on bonds. Interest rates on bonds are tied very closely to Fed Funds Rates, those rates that the Fed charges for member banks. While it is possible for any of these rates to move independently of one another for a while and to diverge from one another a bit, on most days these rates are in lock step with one another.
In early June the market believed that Fed Chair Yellen was going to signal an increase in the Fed Funds Rate for September. In anticipation the mortgage interest rates surged well above 4% for the first time in many months. The actual Fed statement turned out to indicate that any increase was still questionable and that if there were to be increases, they would be slow and incremental. This caused an immediate reversal in mortgage interest rates, which have no settled around 4% on the 30-year fixed.
For the immediate future, one can assume that rates are going to be pretty flat in the 4% range. After being this low for so many years, however, it is sometimes easy to forget that historically 6%+ is the average. If you are contemplating buying a home to live in, or for investment purposes, you should be considering the benefits of capturing a mortgage at these levels.
To learn more, call Bill Rayman at GuaranteedRate.com He will be able to provide you with answers to your questions regarding buying a home in Los Angeles before mortgage interest rates go much higher.