Fed rate rise first in almost a decade - and mortgages?

Question

the economy is still soft but this is the beginning of higher rates....

http://www.prnewswire.com/news-releases/bankrate-mortgage-rates-nosed-higher-leading-up-to-fed-hike-300194351.html

Account Closed · Answer

The 1% rule is now the 1.25% rule

Bill Schrimpf · Answer

I think the lack of interest in this subject is very telling.  It's the biggest non-news topic of the year.  Hopefully Janet Yellen and the other members will do with rates what the did with quantitative easing; get us back to "normal".

@Peter K. and @Matt Motil are correct, at least in the next 1-2 years.  Never-mind the fact that this is the overnight rate, not the 10-year.  If the FED does what is says and slowly moves rates, this will have little to no effect on the mortgage industry, at least for the near term.  Bottom line, if a move of 0.25% in any rate effects the ability of someone to finance a deal, its not a good deal and/or your not really qualified for the deal.

Peter K. · Answer

Don't expect mortgage rates to jump due to the fed funds rate increase.  The Fed can control short term rates, but the market controls mortgage backed securities and mortgage backed securities determine mortgage rates.

We may see a small increase in car loans, HELOCs, and commercial loans though.

Matt Motil · Answer

It's a 0.25% increase in the overnight rate - raising the rate to a whopping 0.25%. Let's not all lose our minds here. Will this ultimately affect the 10-treasury bond that drives mortgages rates? Maybe, maybe not. Will the fed jack the rate again anytime soon? Most likely not, so I don't really think we have too much to worry about.

John C S. · Answer

Why do you say that?