Well, it looks like the Fed will make another move to raise rates again. Along with my blood pressure. As I've noted before, there is so much disinformation from- dare I say it- the mainstream media on this subject, and spreading misconceptions planet wide. While watching the NBC Nightly News, Tom Costello did a feature explaining what this rate hike would mean for consumers. And the answer is "practically nothing."
As I've noted before in this piece, dated March 15, 2016, raising the Fed Funds rate by a quarter of a point will NOT send retirees into Lamborghini showrooms, or even give the bonds of Toys "R" Us a much needed ratings boost, looking to spoil their little darlings.
But the worst bit of dezinformatsia from Mr. Costello's piece was the expected effect the Fed's move would have on mortgage interest rates. And the answer is, as before, "practically nothing." Most mortgages sold are 30 year fixed rate, and those are firmly priced off the 10 year Treasury, not the Fed Funds rate, and the 10 year moves with the market, not the Fed. As this chart demonstrates.
See that, folks? The blue line is the Fed Funds rate, bouncing along a near zero bottom, until the kick-up in yield starts in late 2015, as the Fed changed policy. The red line is the 10 year Treasury, and note that since 2009, when this chart begins, in the throes of the financial crisis, and you can see that it has its very own trajectory, even as the Fed suppressed longer dated rates with Operation Twist and successive QE policies. So this move doesn't affect housing or the mortgage markets one whit.
NBC Nightly News has an 8 million strong audience. And 8 million Americans were just misinformed by this piece on Fed rate policy.
I used to be a mortgage broker many years ago. For nearly 25 years, I've had to keep my eye on that damned 10 year Treasury, and I can still remember clients calling me to lock in their mortgages at 5.75% instead of the 6.00% I quoted them, because the "Fed cut rates." And I had to give an elevator speech on rate mechanisms.
I don't think one of them ever believed me.