September’s Federal Open Market Committee (FOMC) meeting left the Federal Funds Rate unchanged. The Fed Funds Rate—the rate banks use to lend money to each other overnight—does not directly affect home loan rates. However, when this rate increases, consumer rates or lines of credit may also increase, depending on market conditions and the overall economy.
Slowing global economies, especially China’s, were a primary reason given for the decision to stand pat. The World Bank and the International Monetary Fund both urged the Fed to hold off, saying a rate hike could cause “panic and turmoil” in emerging markets around the globe. Here at home, one of the most influential factors for the Fed’s decision was continued low inflation levels.
Following the meeting, several Fed Governors publicly stated they were comfortable with a rate increase later this year. Dennis Lockhart of Atlanta noted the decision not to pull the trigger in September was “prudent risk management” as the U.S. economy is “performing solidly.”
The Fed will continue to closely follow economic activity and news from abroad as it evaluates potential future hikes to the Fed Funds Rate. The good news in the meantime is that home loan rates remain attractive as we head into the fall season.
If you or anyone you know has questions regarding refinancing, or wants to get ahead of home-buying competition with a loan pre-approval, please get in touch today.