"The Federal Reserve's primary tools include controlling interest rates, managing inflation, and promoting employment. A key lever is the Federal Funds Rate, which influences borrowing costs across the economy."
"While mortgage rates aren't directly tied to the Fed Funds Rate, they are influenced by broader financial market trends and the yields on long-term Treasury bonds, which respond to changes in the Fed's rates."
"When the Fed raises rates, borrowing costs for banks increase, leading to higher rates for short-term loans and ARMs. Borrowers may see their interest rates rise after a Fed hike."
"Fixed mortgage rates are closely tied to the yields on 10-year Treasury bonds, which react to market expectations about inflation and Fed policy. Therefore, higher Fed rates often lead to climbing mortgage rates."
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