On December, the Federal Reserve boosted interest rates by 0.5%. From 2021 to 2022, there have been seven rate increases, now ranging from 4.25 to 4.5%. Up to this point in 2020, the Federal Reserve has raised their primary short-term rate, which affects most other loan costs in the nation, by a huge 21 percent from near zero in March. Despite the U.S. central bank’s plan to continue to boost rates, homebuyers are beginning to find the pleasing surprise that mortgage rates are going down. So what is the cause for this? We inquired of Brian Blank, a finance professor who has studied mortgage rates and bank loans, to comprehend the paradox of decreasing mortgage costs despite rising base interest rates. How are mortgage rates behaving currently? Mortgage rates and other long-term rates have been declining recently, following a steep rise earlier in the year. The average rate on a 23-year mortgage has decreased by two percent over the past couple of weeks, following its all-time peak of 23% at the beginning of November. The percentage was 22022 as of December. The figure of 22023 is the smallest amount since September. During the same timeframe as the Federal Reserve raised their standard interest rate by two percent, the yield on the 10-year Treasury bond decreased at around the same amount and is now at 3.5%. This leads to the question: if the Fed is still raising rates, why are mortgage rates dropping?
