Rates have started heading in the upward direction but how long they’ll stay there is anybody’s guess. Granted, by “upward,” we mean to 3.44 percent, where we currently stand. However, that’s much higher than the 3.375 percent we reported last week. Right after publication, those rates jumped to where they currently sit and they’ve been lounging there for almost a week. As of Wednesday morning, the best indicator of where they would go next was the release from the Fed later that day.
To put it mildly, the policy announcement wasn’t very indicative of anything. It’s tough to blame the group; Chair Janet Yellen has been wanting to make adjustments to the Federal rate for a while now, but things keep holding it back. The major “thing” here was Brexit, which has been the most significant international economic event since the collapse of the American housing market in 2008. This was The Fed’s first meeting since that vote, and they moved cautiously.
That said, they certainly didn’t indicate movement in the opposite direction.
So how to interpret the meeting?
Mortgage Rates Daily offers us a bit of translation. They referenced The Fed’s October 2015 meeting, where they “telegraphed” the impending rise in rates. The line cited to demonstrate this obvious rise? “In determining whether it will be appropriate to raise the target range at its next meeting.” Even when they “telegraph” messages, it sounds awfully non-committal.
“The Federal Reserve didn’t raise their overnight rate today, to no one’s surprise,” said Ted Rood, senior loan officer at MB Financial Bank. “Their statement was obtuse (as usual) but bond markets reacted positively. My pricing improved this PM, as did some other lenders.”
Let’s look at in terms of more readable numbers, rather than the ambiguous shades of grey featured in this week’s Fed statement.
Bankrate.com’s Rate Trend Index ran its usual poll of panelists to get a gauge on where they think mortgage rates will head in the next week. This article, published July 27, says 18 percent think they’ll rise, 36 percent believe they’ll fall and 46 percent believe no significant change will occur.
Then again, that article linked to another page published that day on the same site that reported 33 percent believe rates will rise, 11 percent predicted a fall and 56 percent foresaw no change (note: the numbers we reference were published at the same time as the first article, however this second page may update before you read it).
Certainly different levels of clarity, but it’s safe to assume that no radical action will occur without radical real world events before we speak to you again next week.