Federal Reserve Rates Up, Mortgage Rates Down?

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Mortgage loan rates have dropped over the last week.

December 23, 2015
Federal Reserve Rates Up, Mortgage Rates Down?

Photo: Jessica Merz/Creative Commons.

Mortgage rates have decreased since the Federal Reserve System raised its rates last week, Zillow reports.

Most mortgage loans are packaged into Mortgage Backed Securities (MBS), which are traded daily and work inverse with mortgage rates (when rates are up, the MBS prices fall, and vice-versa). After the Fed said it was only raising rates by .25 percent, bond buying resumed, so mortgage rates fell.

Mortgage rates are expected to rise, however, by 0.5 percent by the middle of 2016.

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