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The Fed’s “Force Awakens” Talk of Rate Increases

As the plot thickens and anticipation builds, Star Wars fans and galactic economists (aka the Feds) build steam with talk of mortgage rate increases. Come 2016, home buyers and industry Jedi’s must expect the gradual increase of mortgage rates.  But, despite news that impresses a nod to the “Dark Side,” officials did a very good job of telling the market what to expect.  Key pieces of the statement and press conference, which were handled quite well by U.S. Federal Reserve Chairman, Janet Yellen, stressed the following:

A rise in mortgage interest rates is imminent.  But, preparing home buyers and other industry Jedi's is my first objective.  Let's get started!

A rise in mortgage interest rates is imminent. But, preparing home buyers and other industry Jedi’s is my first objective. Let’s get started!

  1. The committee noted that it expects the coming adjustment of interest rates to be “gradual.”
  2. The statement stressed that the actual pace of adjustment will depend on how the economy evolved.  In other words, it will be data dependent and not mechanical.
  3. The committee said that progress towards their objectives, both realized and expected, would drive subsequent decisions to raise interest rates.

 

Bottom Line: Rate increases are moving onward and upward and more likely in a predictable manner.

Help arm your clients with information and timelines to help them best plan for their next purchase (or sale).  In the meantime, please feel free to consult with me, the Han Solo of all your mortgage transactions, for more market updates and economic data decryption.

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