Rates Jump After Fed Announcement; Construction Recovers, But Material Costs Dent Builder Confidence

Rates Jump After Fed Announcement; Construction Recovers, But Material Costs Dent Builder Confidence

Mortgage rates were already drifting higher in the first half of the week, but that was nothing compared to today. This afternoon's Fed Announcement was certainly on the radar as a potential source of volatility. Needless to say, it delivered. But how much did it deliver, exactly, and why? There's a fairly prevalent misconception that the Fed sets/changes mortgage rates directly. That's really only true when it comes to something like HELOCs (home equity lines of credit) and even then, the Fed is only changing its policy rate. HELOC lenders then set rates that use the Fed's rate as a baseline. On a somewhat similar note, there's another misconception about changes in the Fed Funds Rate correlating with mortgage rate movement. While that can be true over long time horizons, we don't need to