How Does the Fed's Move Affect Mortgages?

Reblogger Lynn B. Friedman
Real Estate Broker/Owner with Atlanta Homes ODAT Realty Call/Text 404-939-2727 Buckhead - Midtown - Westside -- and more ...

Dear Readers,

If you follow my Blog, you already know that I love to learn from John Meussner and his Mortgage Advice. This post is another example of his clear and careful teaching about current topics. 


Be sure to read other posts on John's ActiveRain Blog.
Lots and lots to learn there.


Contact John Meussner  if you want a Mortgage in California, Delaware, Florida, New Jersey and Pennsylvania where he is personally licensed. The firm where he works, Mason-McDuffie, is licensed in several other states, one of which is Georgia!

In those states, John acts as the Primary source of the loan - YOUR personal Loan Officer - and the local corporate Loan Officer assists him by taking the application and quoting/locking the rate. So - basically - you get John's experience all the way!

Have a successful day -

PS  If I haven't thanked you personally yet, let me say thanks now for reading my posts and peraps even commenting on one or more! L.


Original content by John Meussner NMLS #138061 MMCD #1141

How Does the Fed's Move Affect Mortgages?



     There are only 2 answers to this question that leave no room for debate - "it doesn't" and "we'll see".  Informative, right?  The reality of the Fed's December decision to raise the Fed funds rate for the first time in nearly a decade has been expected for some time, and comes on the heels of numbers that portray a strengthening economy, a healthy job market, and at least some level of Fed rate hikestability across the spectrum of our economy.  Many prognosticators are offering up opinions on what will happen, but the truth is, no one knows where we go from here.



     The economy we've seen over the past decade is one of uncharted waters.  The Fed has implemented as many controls as it could muster in that time in an effort to stabilize what was once a market in complete self-destruction.  Some of these controls had intended results.  Others did not.  



     From here, a couple of scenarios could play out, along with many more that fall in the middle, somewhere between these 2 possibilities.  One scenario is that the economy continues to improve, and a private market for mortgage backed securities recreates itself.  In this scenario, stocks improve (along with the economy as a whole- largely dependant on wages and inflation), and interest rates on mortgages steadily increase, held in check by competition, but increasing to keep in check with overall economic conditions.



     Another scenario (and the one I think is closer to reality) is that the Fed's rate increases reveal that all that has glittered over the past few years hasn't been gold - meaning the large gains in the stock market and the economy as a whole are largely (or solely) the result of unlimited quantities of almost free-money being available for nearly a decade.  Think about it.  If you could borrower unlimited funds and pay between 0-.25 percent, do you think you could turn a hefty profit on that money?  You'd be a pretty poor investor or business person if you couldn't.  What about when that borrowing rate moves to 2, 3, or 4 percent?  Things would be a little tougher, and would require savvy and favorable market conditions.  In this scenario, the rate hike hinders the folks that have been making a killing playing the market with Monopoly money, and "trickle down" economics come into play, resulting in layoffs, slowed development, and possibly another recession, or at least continued stagnation - market conditions that bring about those same low interest rates we've seen over the past 5 years.



     There are innumerable possibilities between these 2 scenarios, and outside factors will impact the mortgage interest rate atmosphere - including stocks, commodity prices, and geopolitical events.  As things unfold though, the mortgage markets should remain largely in-check and similar to those we've seen for the past 2 years, at least for the most part.  Any increases to mortgage rates were largely already factored into the marketplace ahead of the Fed's announcement, as trading has run rampant over the past year as the Fed's decision seemed to transition from "if" to "when".  



     One thing is for certain going forward, the Fed has shown that it would like to end the free money party sooner rather than later, and if they think they can, they will.  This first rate hike should be a wake up call to the marketplace that it needs to figure itself out.  As rates increase, those who have been drunk on free money need to sober up, and adapt to a new reality - because the Fed has made it clear, the party is over.



     For the short term, though, mortgages, rates, and product offerings won't be changing, at least not any more than they have been the last 6-12 months, which means continued volatility, but no major changes to the mortgage landscape.

John Meussner

NMLS# 138061

Visit My Website!



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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Lynn B. Friedman 

Great choice for a reblog, given how much anticipation there has been about the Fed's expected move. John does a great job of outlining the issues - I have lots of respect for his opinions and how he shares information


Dec 18, 2015 10:34 AM #1
Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale-Probate & Trust Specialist

Lynn, Great Re-Blog.  I am a big fan of Mr. John Meussner - he is my preferred lending partner.  The man knows his stuff. 

Dec 18, 2015 10:55 AM #2
Lynn B. Friedman
Atlanta Homes ODAT Realty Call/Text 404-939-2727 Buckhead - Midtown - Westside -- and more ... - Atlanta, GA
Concierge Service for Our Atlanta Sellers & Buyers

In case you cannot read the rule above --- 
"The Bank never goes bankrupt. To continue playing, use slips of paper to keep track of each player's transactions - until the bank has enough paper money to operate again. The Banker may also issue 'new' money slips of ordinary paper." 

Dec 18, 2015 11:18 AM #3
William Feela
Realtor, Whispering Pines Realty 651-674-5999 No.

I had two clients that said it is time to get serious about buying

Dec 18, 2015 11:33 AM #4
TeamCHI - Complete Home Inspections, Inc.
Complete Home Inspections, Inc. - Brentwood, TN
Home Inspectons - Nashville, TN area - 615.661.029

 Good morning Lynn. I do not think that we will see an immediate impact from the rate hike.

Dec 18, 2015 05:48 PM #5
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Thank you for reblogging the post. I thought John now works in California. I will contact him for Pa.

Dec 18, 2015 08:28 PM #6
John Meussner
Mason-McDuffie Mortgage, Conventional Loans, Jumbo Loans, FHA, 203(k), USDA, VA, - Walnut Creek, CA
#MortgageMadeEasy Walnut Creek, CA 484-680-4852

Thank you for the reblog & the kind words, Lynn!  Have a wonderful week.

Dec 21, 2015 04:31 AM #7
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Lynn B. Friedman

Concierge Service for Our Atlanta Sellers & Buyers
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