March Fed Meeting: A New Chair and Another Rate Hike

March brought the FOMC’s first meeting with Jerome Powell at the helm as chair. Under his leadership, members voted unanimously to raise the federal funds rate at this month’s meeting. Let’s take a look at what financial experts are saying about the Fed’s most recent rate hike and what to expect the rest of the year.

2018’s First Rate Hike, and What’s to come

It didn’t come as a huge surprise to those who have been predicting a rise in mortgage rates since the beginning of the year. The FOMC decided on the standard 0.25% hike, bringing the target federal funds rate to a range of 1.5% to 1.75%.
Although the language of the FOMC statement described the nation’s economic activity as rising at a “moderate” rate, compared to January’s “solid” pace, most financial experts still expect more rate hikes to come this year. The question is whether we’ll end up with three or four in total by the end of 2018. Both household spending and business fixed investment were described as “moderated” compared to the fourth quarter of 2017, while unemployment has remained low. So future hikes will largely depend on the economy’s trajectory throughout the coming months.
There are six more FOMC meetings planned in 2018, which will occur in May, June, July, September, November, and December. Press conferences are scheduled for the June, September, and December meetings. Experts often correlate rate hikes with meetings that include press conferences because it gives the chair a chance to answer questions on the FOMC’s decision.

What this means for mortgage rates

While the Fed’s move does not directly correlate to an increase in mortgage rates, it is widely expected that bond yields will continue to gradually rise throughout the year, bringing mortgage rates with them. Since adjustable home equity lines of credit are tied directly to the Prime rate, homeowners with these type of HELOC’s are already feeling the effects directly of each raise.
With the additional rate hikes that are planned for the next couple years, homeowners with these lines of credit are starting to be more proactive about refinancing to get rid of those adjustable balances.
We’ll continue reporting after each FOMC meeting this year to make sure you’re fully informed of everything going on with the FOMC and mortgage rates in 20181 and beyond.
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