When the Federal Reserve, also known as the "feds," raises interest rates, it means that they are increasing the cost of borrowing money. This can affect the economy in a number of ways, including making it more expensive for individuals and businesses to take out loans and potentially slowing the pace of economic growth. Higher interest rates can also lead to a stronger currency, which can make exports more expensive and potentially hurt domestic manufacturers. Overall, the decision to raise interest rates is typically made in an effort to manage inflation and maintain the stability of the economy.
And how does that relate to mortgage rates?
Mortgage rates are typically influenced by the interest rates set by the Federal Reserve. When the Fed raises interest rates, it can cause mortgage rates to rise as well. This can make it more expensive for individuals to borrow money to buy a home, which can in turn slow the housing market. However, it's important to note that there are many other factors that can affect mortgage rates, and the relationship between the Fed's interest rates and mortgage rates is not always straightforward. For example, economic growth, inflation, and the overall state of the housing market can all impact mortgage rates independently of the interest rates set by the Federal Reserve.