What Does 6% Mean For The Mortgage Industry?
Summary
While all indications are that the Fed will raise the Federal Funds rate a half-point today — with a possible end result of 6% mortgages soon after — the pressure to do so increased, says one economist, when the yield on the 10-year Treasury bond went over 3% this week. “The significant tightening in financial market conditions is doing some of the Fed’s work for them, so the central bank may not have to raise rates as much down the road,” said Moody Analytics economist Ryan Sweet. “We’re not seeing a ton of buyers stepping out of the market because of the increase in interest rates.” That sentiment was born out by numbers released today by the Mortgage Bankers Association. Travis Rulle, chief operating officer of Orlando, Fla.-based FBC Mortgage, is worried about the impact of higher interest rates on the housing market. “In a period of high home-price growth and rapidly increasing mortgage rates, borrowers continued to mitigate higher monthly payments by applying for ARM loans,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.