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The Fed Does Not Control Mortgage Rates!

The belief that the Fed raising their benchmark rate leads to increases in mortgage rates is one of the biggest misconceptions in real estate right now.

The Fed Funds Rate is what banks pay for overnight borrowing and has an almost immediate effect on things like savings accounts, auto loans, and credit card interest rates.

Mortgages are long term borrowing instruments (usually 30 years) and more closely mirror the 10 year Treasury more than the Fed Funds Rate. Pricing on the 10 year treasury is market driven. It is a balancing act of what is going to happen with the economy over the next 10 years. 

At this point in time, the 10 year treasury is pricing in a recession. In recessions, interest rates typically fall to stimulate growth. So when you want to predict where mortgage rates are going, pay attention to the 10 year treasury, not the fed.