Why Didn’t Interest Rates Go Up With The Fed Increase?

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Mortgage rates have been coming down for several months even though they have increased interest rates on the Fed level by .75 in rate increases in a period of 6 months. How is that with the fed increase in rates we are not seeing much of that in the mortgage marketplace and in most cases have actually seen a decline?

The spread between the 2 year treasury and the 10 year treasuring is used to project the path of interest rates moving forward. We are currently seeing the spread compressing to the lows that we have seen in about 8 years. When the shape of the curve goes negative it’s a relatively good indicator that there is a recession upcoming.

There is an obvious factor which is the Fed does want to raise interest rates and there is another projected increase later this year. They want to preserve accommodation for a time down the road where they need economic stimulus. They have been relying on the unemployment rates to project the path of inflation as wages will rise which is extremely subjective. We have not been seeing an increase in the cost of goods, commodities or food and in some cases a deflation of value.

Now is a good time to lock in your interest rate while the yield curve is flat, if it goes far below the norm we could see a recession that will plague the marketplace. Feel free to call us with any questions 800-779-4547.
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LoanSafe Member
Homes prices will collapse in near future, no reason to lock into any rates at this point when the value of any real estate property be plummeted by 50%. Everything is over priced. We haven't seen the worst yet!

Moe Bedard

Call 1-800-779-4547
Staff member
Loan Safe Mortgage
As they always do but I do not think it will be for 2-3 years. This is the same old real estate game of investing. You need to time it right and get the right mortgage if you want to lay the game to your advantage. If you can get a home in the right location at the right price and with the right mortgage than you will be ahead of the game but if you make one screw up in the process, it may cause you to become a pawn when the kings clean up the board.