The Federal Reserve meets today to discuss the economy and key interest rates that significantly affect credit and mortgage rates. It is widely anticipated that the Fed leave the key interest rates at 2%, which would keep the prime-lending rate for consumers at 5%. The Federal Reserve has signaled that its next move on interest rates is likely a hike but when the Fed changes directions remains unclear. Several Maryland FHA Mortgage Lenders indicated in a recent article that, rate and term refinancing has declined for conventional loans but has increased slightly for FHA streamline refinance loans. According to Drew Mchale, “FHA streamline business is very volatile, because if the interest rates rise at all, then borrowers typically back out of the loan, because the benefits disappear.”
Charles Plosser, president of the Federal Reserve Bank of Philadelphia, last month said the Fed probably will need to boost rates “sooner rather than later” even if employment and financial conditions haven’t revived. Richard Fisher, president of the Federal Reserve Bank of Dallas, opposed the Fed’s decision in June to leave mortgage rates unchanged. He said he preferred a rate increase then to fend off inflation. Mortgage lenders eagerly await the Fed’s next moves.
