Mortgage rates fall sharply after negative GDP report and latest Fed hike

Just one day after the Federal Reserve raised its benchmark rate, mortgage rates took a sharp turn lower.

The average rate on the popular 30-year fixed mortgage fell to 5.22% on Thursday from 5.54% on Wednesday, when the Fed announced its latest rate hike, according to Mortgage News Daily. The rate fell even further Friday to 5.13%.

Rates hadn’t moved much in the days leading up to the Fed meeting earlier this week, but they had been slowly coming off their most recent high in mid-June, when the 30-year fixed briefly crossed 6%.

The average rate on the popular 30-year fixed mortgage fell from 5.54% on Wednesday to 5.22% on Thursday, when the Fed announced its latest rate hike. Mortgage news daily.

Rates didn’t move much in the days leading up to the Fed’s meeting earlier this week, but they slowed to their most recent high in mid-June, when the 30-year fixed briefly topped 6%.

Thursday’s drop came on the back of a gross domestic product report from the Bureau of Economic Analysis that showed the U.S. economy contracted in the second quarter.

This is a widely accepted signal of recession. GDP fell at an annualized pace of 0.9% for the period Preliminary assessment. Economists polled by Dow Jones expect growth of 0.3%.

The Fed is also trying to combat raging inflation, which reached a 9.1% annual rate in June, the worst mark in nearly 41 years. Rapid price increases, particularly for such essentials as food, gas and rent, have eroded Americans’ incomes and led to much gloomier views of the economy among consumers.

The definition of recession that is most widely accepted is the one determined by the blandly named National Bureau of Economic Research, a nonprofit group of economists whose Business Cycle Dating Committee defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.”

The committee assesses a wide range of factors before publicly declaring the death of an economic expansion and the birth of a recession — and it often does so well after the fact.

The Fed’s hikes have already led to a doubling of the average rate on a 30-year fixed mortgage in the past year, to 5.5%. Home sales, which are especially sensitive to interest rate changes, have tumbled.

Some economists have echoed an observation Powell made at his news conference Wednesday: That the economy, looked at as a whole, does not appear to be in the grip of recession. 

We have always emphasized the importance of having a good website for your company because it can act as your best tool for marketing and sales. A poorly designed website can repulse people from your business and can cause you to lose customers before you even have them. Get in touch with HyperEffects to work on creating, enhancing, and making the website of your company more user-friendly.

0/5 (0 Reviews)
0/5 (0 Reviews)
0/5 (0 Reviews)
Scroll to Top