The Federal Reserve raised rates at its December meeting by 0.25 percent. Here's what you need to know about the event. 1. The Fed raises or lowers the overnight cost of money, “Fed funds,” not mortgage rates. Yes -- twice in Fed history it manipulated (down) long-term rates (1942-1950 and 2008-2013), but only in all-out emergency situations. All the rest of the time, long-term rates move in market response, guessing at the future slope of economic growth and Fed moves. 2. Mortgage rates did rise after the hike today. Mortgage rate quotes are always hard to decode, presented as they are in deceptive mixtures of rate and fee. The 10-year T-note is definitive and in plain sight, 2.43 percent this morning and 2.53 percent this afternoon. No-fee 30-fixed mortgages are just barely holding on to 4.25 percent, going higher. 3. The Fed estimates two more hikes next year, possibly three. It will continue to hike until it either slows the U.S. economy to growth ...
- The Fed raises or lowers the overnight cost of money, “Fed funds,” not mortgage rates -- but mortgage rates did rise a little today.
- The Fed plans three more hikes through 2017.
- When short-term rates keep rising, but long-term rates stop, it's time to worry.
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