If there was one headline last week to pay attention to, it was this: The Fed didn’t raise rates, but three of its own members wanted to.

What Happened?

The Federal Reserve met last week and voted to leave rates unchanged. Simple enough, right? Except the vote was 9-3, and that’s not the near-unanimous decision we’ve seen.

Three policymakers wanted to raise borrowing costs right away but were outvoted.

That doesn’t sound like a big deal on paper, but in practice, it’s rare. Fed votes are usually formalities, and everybody generally goes along. A public three-person revolt is the Fed equivalent of a family argument breaking out at Thanksgiving dinner in front of the guests.

Meet the Rebels

These dissenters are Beth Hammack, Neel Kashkari, and Lorie Logan. All three of the regional presidents who voted against the move supported the same reason: inflation is still too hot, and they think the Fed needs to act now rather than wait.

Furthermore, you have to consider the rising oil prices caused by the active war in the Middle East. The Fed doesn’t operate in a bubble. International factors will ultimately determine how long it takes for that mortgage statement to reach your mailbox.

The bigger signal here is not really about oil, but that the Fed is clearly not as united behind the scenes as its official statements make it sound.

What the Fed Chair Is (and Isn’t) Saying

Chairman Warsh isn’t giving any hints about what comes next. No forward guidance, no promises.

He reasons that he’d rather the committee hash out real disagreements rather than have false unity. It’s a defensible approach, but it leaves markets without a clear signal, making things much more volatile.

Why This Matters… and What’s Next

The dissent spooked investors, meaning a rate increase could be coming soon. Investors responded by selling off bonds. Selling bonds pushes bond yields higher, and mortgage rates move up within a day.

Our take: With three officials already voting in favor of a rate hike, and perhaps several more waiting to join them, September is shaping up to be a real possibility.

If you were hoping to wait for rates to fall before locking in, this may not be an option anymore.

Ryan Mallender
Market Analyst
Formula Mortgage Capital

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Borrowers:

Self-employed borrowers can have a challenging time qualifying for a traditional home loan. But you do not have to worry about there not being a program available to help you qualify for a mortgage. Bank Statement programs are designed specifically for those who do not have the tax documents, W-2’s,or adequate proof of income that clearly indicates their ability to pay. The home that seemed out of reach can now be a reality!

Contact me today for a customized mortgage solution that best fits your circumstances.

The post Expanded Access appeared first on Formula Mortgage Capital Corporation.

Realtors:

Self-employed borrowers can have a challenging time qualifying for a traditional home loan. But you don’t have to worry about there not being a program available for your client to qualify for a mortgage. Bank Statement programs are designed specifically for those who do not have the tax documents,W-2’s, or adequate proof of income that clearly indicates their ability to pay. Give your borrower the good news that the home that seemed out of reach can now be a reality.

Contact me today for a customized mortgage solution that best fits your circumstances.
Borrowers:

Self-employed borrowers can have a challenging time qualifying for a traditional home loan. But you do not have to worry about there not being a program available to help you qualify for a mortgage. Bank Statement programs are designed specifically for those who do not have the tax documents, W-2’s,or adequate proof of income that clearly indicates their ability to pay. The home that seemed out of reach can now be a reality!

Contact me today for a customized mortgage solution that best fits your circumstances.

The post Expanded Access appeared first on Formula Mortgage Capital Corporation.

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