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What the Federal Reserve's Rate Increase Means for Mortgage Rates

July 28, 2022 | Posted by: Jeremy Wilhelm

To continue trying to tame sky-rocketing inflation, the Federal Reserve voted on July 27, 2022, to hike the Fed funds rate by .75%, as expected, bringing the Fed Funds Rate to 2.5%.

This announcement by the Federal Reserve is in reference to what banks charge each other for overnight loans, not mortgage rates. Rates on 15 and 30-year fixed mortgages do not move interchangeably with the Federal Reserve’s rates. Instead, they are based on the bond market, meaning mortgage bonds or mortgage-backed securities, which are influenced by various factors. Rates on 30-year fixed-rate mortgages are down .3% from a month ago.

Most of our clients think that when the Federal Reserve increases interest rates, it’s the same for mortgages, and that can’t be further from the truth. The last two rate hikes the Federal Reserve has done have seen a nice drop in long-term interest rates, which has been great for those building and looking to buy a new home.

Mortgage Rates jump at any news of higher inflation, so when you see the rate hike we just did, that is where we have seen a bounce in bonds and a nice small drop in rates. The volatility isn’t over yet, but for now, this is great news for mortgage rates. All in all, the Fed’s decision to increase rates is likely to have minimal impact on mortgage rates. That being said, it’s important to stay flexible and ready for whatever the market throws our way. If you’re looking to buy in the next few months, it’s essential to get your finances in order first.

We work with our buyers and their finances at Wilhelm Mortgage to ensure they’re getting the best rate possible. To learn more about the mortgage process, visit our website at

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