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A Message from Timothy Baron:

"Not a huge improvement in rates, but going in the right direction finally. Will it continue tomorrow, or will markets snap back?"
Mortgage Rates Improve After Fed Announcement

Mortgage rates improved in a somewhat noticeable way for the first time in weeks following today's policy announcement from the Fed.  Actually, to be fair and accurate, rates didn't improve until Fed Chair Powell answered a question about inflation during his press conference, saying the Fed doesn't see inflation "surprising to the upside."  That's a fancy way of saying they don't expect inflation to rise any faster than forecasts suggest.

Inflation is critical to the Fed's decision-making process--especially because we're currently at an important crossroads.  For the first time since before the financial crisis, core inflation stands a chance to make a sustained move up and over the 2% barrier.  2% is generally the line in the sand, above which the Fed is more apt to think about tightening monetary policy (i.e. doing things that push interest rates higher).  This time around, they began tightening well in advance of 2% inflation because they were highly confident in the inflation outlook (and they were right).

If the Fed doesn't see inflation running hotter than expected, and if today's interest rates do what they can to price-in future expectations, the only risk remaining is that inflation progresses slower than expected.  That would be good for rates and that's essentially why rates recaptured some recently-lost territory today.

This Daily Mortgage Rate Update is provided in partnership with Mortgage News Daily.