As predicted, the Federal Reserve has just raised its benchmark Federal Funds rate, upping its target by 0.25 percent (25 basis points) and signaling expectations for another two quarter-point increases by the end of the year.

The Fed dropped the benchmark rate 5 percentage points between August of 2007 and the end of 2008, a move which helped drive mortgage rates down to an all-time low of 3.31 percent in 2012. The Fed has since raised its target rate by a total of 0.75 percent.

The current average rate for a 30-year mortgage was running around 4.21 percent as of mid-last week with the probability of a rate hike this week likely already priced-in.

3 thoughts on “The Fed Institutes a Rate Hike, Signals Two More This Year”
  1. And . . . bonds rallied on the news, with the interest rate on the 10-year falling 3.35%, from 2.59% to less than 2.51%.

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