When researching mortgage rates, you’ll hear a lot of chatter about what “The Fed” is doing. The Fed refers to the Federal Reserve, the nation’s central bank. The Federal Reserve is charged with ensuring a stabilized economy, preventing negative economic conditions such as those that led to the collapse of the economy following the stock market crash of 1929. They play a role in mortgage rates and most likely impacted today’s rates to some extent.
The average daily mortgage interest rate for Monday, January 8, 2024 is 6.80% for a 30 year fixed rate. The rate rose 0.06% from yesterday and dropped 0.29% from December 2023. This information is sourced daily from correspondent, retail, and wholesale lenders located in the United States.
The average daily mortgage interest rate for Monday, January 8, 2024 is 6.07% for a 15 year fixed rate. The rate rose 0.07% from yesterday and fell 0.43% from December 2023. This information is sourced daily from correspondent, retail, and wholesale lenders located in the United States.
What is the role of the Federal Reserve?
While recessions are part of the standard ebb and flow of our economy, the Federal Reserve’s duty is to minimize the impact of recessions on individuals and businesses to ensure the economy continues to thrive. Prospective homebuyers are aware of how it’s important to feel stable and confident about their buying power and ability to pay a mortgage, and factors like job stability do weigh in.
What is the Federal Funds Rate?
The Fed sets the federal funds rate, or “FFR”. This doesn’t mean it controls the average mortgage rate or any mortgage rate set by each bank as lenders to consumers like you, but the FFR affects the rate at which banks may borrow from each other. Naturally, changes in the FFR impact the interest rate they are then able to offer prospective homebuyers.
While the media ties the rates the fed sets to overarching news such as the health of the economy or the efficacy of a presidential administration, it’s stringently set by The Fed, not the president, Congress, or any other governing body – and The Fed is comprised of economists and financial experts, not politicians. The Fed adjusts interest rates eight times per year in response to the current state of the economy.
Are FFR changes predictable?
You’ll see a lot of experts on TV trying to predict changes prior to each Fed rate announcement. As a prospective homebuyer, it’s a good idea to pay attention and to become more informed about all sorts of factors affecting the economy at large, as they can affect the average mortgage interest rate offered.
To understand more about how the Fed stabilizes the economy, read upon the Fed responses to major events that may have happened in your lifetime, such as the terrorist attacks of 9/11/2001, the subprime lending crisis in 2008, and the COVID-19 pandemic of 2020.