This is our reminder to you that the Fed rates do not equal mortgage rates. Don't let the media scare you and think that a Fed rate hike means mortgage rates are going to follow suit. This is our favorite chart showing what really happens. You can go right to the source. Go to FRED and get the Fed Funds Chart then add the 30-year Mortgage data and boom, you can look at them side-by-side since 1971.
What you'll see is that the blue line (Fed rate) spikes over time, but the red line (mortgage rates) are directionally the same, but they do not follow in lockstep.
Even in the most recent (2023) rise in Fed and mortgage rates, the mortgage rate increases are happening BEFORE the Fed rate hikes.
This is because the Mortgage Backed Security (MBS) market is driving the mortgage pricing and that is driven by human traders making bets on what they think the Fed and economy will do.
