Fed Skips Rate Hike in September. Is This Good News for Mortgage Rates?

The Federal Reserve has decided not to raise interest rates following its September meeting. Despite a recent uptick in inflation for two consecutive months, the central bank opted to maintain the federal funds rate at its current level. This decision comes as job growth slows down while economic activity continues to expand.

While the Federal Reserve's actions don't directly determine mortgage interest rates, they are closely related. Mortgage rates are influenced by various factors, including the central bank's policies. After a series of rate hikes in recent meetings, the Fed's decision to pause was expected, but the fight against inflation is ongoing.

Inflation had been gradually decreasing over the past year, but it rose from 3.2% in July to 3.7% in August, still above the Fed's long-term target of around 2%. The Fed's goal is to restore price stability to prevent prolonged uncertainty and its impact on economic growth.

The future of mortgage rates will depend on the lagging effects of past rate hikes and the Fed's latest pause. While rates had been trending upward, the recent Fed action could contribute to a decrease in rates. However, mortgage rates are influenced by various factors, and there are no guarantees.

If you're considering a mortgage, it's advisable to reach out to a mortgage professional to explore the current rate options and loan types available to you.

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