Washington Interest Rates
Washington is a state in the Pacific Northwest region of the United States. The state is named after George Washington, the first President of the United States. Washington was carved out of the western part of Washington Territory and admitted to the Union as the 42nd state in 1889. In 2006 the Census Bureau estimated the state's population at 6,395,798.
If you decide to enjoy the historical sights, bustling business and interesting conglomeration of people in Washington, you should consider how to go about having a home there. In doing so, it is a good idea to look into the mortgage rates in the area. The federal funds rate is the interest rate charged when banks lend funds to one another. This is a short-term rate, or a rate that is two years or less in maturity.
When the Federal Open Market Committee raises or lowers the Fed funds rate, it affects mortgage rates that are tied to short-term interest rates, such as home equity rates and adjustable rates.
When short-term rates fall, borrowing and spending usually increase, which can cause inflation. In addition, long-term interest rates, or rates that are 10 years or more in maturity such as for 30-year mortgages, are influenced by short-term rates in a round-about way because they can rise when concerns about inflation increase.
To keep inflation under control, the Fed started raising short-term interest rates in 2004. Consequently, people who have adjustable rate mortgages have been refinancing into longer-term fixed-rate mortgages to avoid rising rates, especially since long-term rates have remained historically low for quite some time.
The Fed funds rate is currently at 5.25 percent. However, it is almost impossible to accurately predict the future of something as complex as the U.S. economy, so no one is ever really sure if or when the rate will change.
Regardless, it is important to understand some of these market dynamics because a lack of understanding can sometimes cost you a lot of money.
Washington interest rates are influenced by supply and demand. When the economy is robust and borrowing is strong, interest rates rise. When the economy softens and there is less borrowing, and interest rates decrease.