Broker warns rate locks may be needed before potential Fed hike
“Consumers that have credit cards, HELOCs, any other debt with adjustable rates could feel this impact more directly with an increase, because those rates do usually follow the Fed much more closely,” she said. “The payments or interest costs can increase and put additional pressure on household budgets. For homebuyers, short-term movement in interest rates can affect both their monthly payment and how much home they qualify to purchase.”
Watching Warsh’s words
Shelton said the market had already been pricing in a hike well before Wednesday’s announcement.
“Interest rates generally move with anticipation of the market,” she said. “I feel like the last couple of weeks we’ve seen that fluctuation pretty drastically, because of the anticipation of this Fed meeting.”
She said the specific language Fed chair Kevin Warsh uses in his post-Fed press conference could have more impact on the market than the rate move itself.
“Warsh’s tone during the conference is extremely important,” she said. “If he says that the Fed can be patient and watch upcoming economic reports before making another move, the markets may take that as a positive sign. If he says inflation remains a serious concern and the Fed is prepared to continue raising rates, we could see more pressure on the bond market and mortgage rates. The words following the decision could have a larger effect on mortgage rates than the actual increase itself.”
