Being smart with $$ -- Fed interest rate changes are different than what you may think

The Fed left rates unchanged today. What does it mean? The Fed changes only overnight lending rates, or loans that mature in one day. The markets dictate rates on all longer maturities. Did someone tell you that the Fed is raising rates so you better lock in a low mortgage rate now? It doesn't work that way. Long-term rates move differently than short-term rates and are hard to predict. In fact, since the fed raised overnight interest rates by a quarter of a percent three months ago, five-year maturity treasury rates AND 30-year mortgage rates are both LOWER by about a quarter of a percent.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com