Will the Feds Finally Raise Interest Rates?

Time to get a little wonky, guys!

This Thursday marks the beginning of a very important Federal Reserve Open Market Committee (FOMC) 2-day meeting.  What is at stake is something that's been discussed for a couple of years now - will the Federal Reserve finally raise the overnight rate?  The overnight rate is the interest rate at which banks can borrow money from the Federal Reserve, and has not been raised in over 9 years.  This overnight rate has huge implications on the U.S. and global economies, and will directly affect mortgage rates.

As I already mentioned, analysts and bankers have been anticipating a raise in the overnight rate for at least a couple of years, and yet it has not happened.  REALTORs and loan officers have been on pins and needles, worried that an uptick in rates would derail a housing market that has improved markedly since the collapse in 2007.

This is the Fed's last meeting of 2015, and whatever they decide to do will certainly be an indication of what they plan on doing in 2016.  We all know that mortgage interest rates at 4% is not sustainable long-term, and it's just a matter of time before the Fed's start to "correct" what has been the status-quo for nearly a decade.

I think the key takeway is that even if the FOMC decides to raise rates on Thursday/Friday, they will almost certainly go about doing so in a cautious and conservative manner.  So barring something economically catastrophic, we should continue to see VERY affordable mortgage rates for the time being.