Tuesday, December 22, 2015

Federal Funds Rate Rises For First Time In Seven Years

Last Wednesday, the Federal Open Market Committee announced the first increase to the Federal Funds Rate in seven years. This increase in the rate recognizes the considerable progress that has been made toward restoring jobs, raising incomes and easing economic hardships facing our country today. The increase also reflects the Fed's confidence that economic factors still lagging behind desired levels will continue to improve, particularly inflation, manufacturing and new home construction.

What is the Federal Funds Rate? 

The Federal Funds Rate is the interest rate used when depository institutions (banks and credit unions) lend reserve balances, or money, to each other overnight. Reserve balances are amounts held at the Federal Reserve to maintain depository institutions' reserve requirements. Institutions with surplus balances in their account will lend to those institutions in need of a larger balance. The Federal Funds Rate is an important benchmark in financial markets. It was held near zero to support economic recovery following the worst financial crisis and recession since the great depression.

What Does the Increase Mean for Mortgage Rates?

While the increase to the Federal Funds Rate does not have a direct impact on home loan rates at the Lake of the Ozarks, we could see an increase in the near future. It's important to keep an eye on economic news. The economic conditions that made the Fed's finally comfortable with a rate hike, and the further strengthening of the economy, could also amplify investments in stocks, which could negatively impact bonds. Those bonds include mortgage bonds, to which home loan rates are tied.

For now, Lake of the Ozarks mortgage rates remain attractive. Now is the time to buy if you've been thinking about it. Give the best mortgage lender at the Lake of the Ozarks a call at 573-746-7211 today about your financing options. When it comes to your financing needs, I'm committed to working with you every step of the way!

For Lake area news, resources and tips on financial services, please 

Michael Lasson
Sr. Residential Mortgage Lender
NMLS #: 493712

2265 Bagnell Dam Blvd, Suite B
PO Box 1449
Lake Ozark, MO 65049

Direct:  (573) 746-7211

Email:  mlasson@fsbfinancial.com

**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.

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