Close spiff

Ready to see how much house you can afford?

A Resource For Home Buyers

We want to be a one-stop home buying resource for you, and one way we’re doing this, is by providing helpful tips and information about the mortgage industry, buying and selling your home – and many other useful topics that you’ll likely encounter on your path to home ownership. We’re confident that you’ll learn something new every time you visit this page.

FOMC maintains current federal funds rate of 2-2.25 percent

This week, the Federal Open Market Committee met for the first time since raising the federal funds rate to a range of 2-2.25 percent in late September, and voted unanimously to maintain that current rate for the time being.

Despite choosing to stand pat on the present rate, the FOMC remained optimistic on the state and direction of the U.S. economy, noting that unemployment has continued to decline, household spending has continued to grow and overall inflation has remained near 2 percent.

This represents the FOMC's first meeting since President Trump placed a 10 percent tariff on $200 billion in Chinese imports in late September and the stock market weathered a volatile October. Neither development was explicitly cited in the FOMC's official statement, with the committee instead acknowledging that its decision to maintain current rates was made "in view of realized and expected labor market conditions and inflation."

Currently, experts anticipate that the FOMC will raise rates again when it convenes for the eighth and final meeting of the year this Dec.18-19, 2018. Should that come to pass, it would be the fourth such increase of 2018, with Fed officials already forecasting three more hikes in 2019, according to USA Today.

Here's what the current federal funds rate, and the projected increase, means for consumers:

Your loan rates should remain steady

Because it directly affects monetary and financial conditions, the fed funds rate is one of the economy's most significant interest rates. The rate also indirectly influences short term interest rates, since lenders often base their own rates on the prime lending rate.

Those who have fixed rates on their loans remain unaffected, but variable rates periodically change to reflect market fluctuations. If you currently hold a variable rate loan, such as credit card debt or a personal loan, what you owe could be affected by federal funds rate for the time being. However, if you've considered refinancing to a fixed rate, you will likely want to do so now, before the federal funds rate hike projected for December comes to fruition.

Consider taking out a new loan sooner rather than later

Similarly, if you have been considering taking on a mortgage, auto loan or other type of personal debt, this news may also have some bearing on your decision.

With rates remaining steady until at least mid-December, one more increase anticipated before the end of 2018 and three more likely to come over the course of next year, now may be the best time to take advantage of the relatively low rates currently available. If you would like to get the loan process started, contact the Federal Savings Bank today.