How will the Fed Rate Hike Impact Me?
On March 14, 2017, the Federal Reserve Bank announced it had increased its target range for Federal Funds, or Fed Rate, by 0.25% to a target range of 0.75 percent to 1 percent.
The Fed Rate applies to funds loaned by banks to each other but it is supposed to be the bedrock interest rate which affects all others. Unfortunately, it doesn’t work that way in practice. The market sets all other interest rates and the market always acts to further its own interests. So, different interest rates, like mortgages, short-term debt, and savings are each affected differently.
Mortgage rates: The Fed rate increase has been anticipated for some time (the surprise would be if they had not raised rates.) The yield on the 10-year Treasury note, which is used by banks to price mortgages, has been moving up since the election; mortgage rates are up, but not due to the Fed’s action.