Fairly frequently I am asked, by friends, for investing advice. One topic I am asked about frequently is mortgages (locking in rates, etc.). Often they are concerned about what a Federal Reserve decision to raise or lower rates will effect the 30 year fixed mortgage rate. Essentially the decision by the Fed won’t have any predictable impact (this is not the complete truth but close enough for the question being asked - this article has more, though it still just provides a cursory view of the situation).

The chart here, shows 30 year fixed mortgage rates from 2000-2005 versus the federal funds rate. I don’t see any evidence that increases or decreases of the Fed Funds rate have a predictable impact on the 30 year fixed rate mortgage. For a larger chart and charts from 1980-1999 see 30 Year Fixed Mortgage Rates are Not Correlated with Federal Funds Rates.

I actually looked around for such charts online (to show a friend last week) but couldn’t find any (I sure they must be there but still I couldn’t find them). So I decided to create them myself. I used data from the Federal Reserve on historical rates. I was convinced the data would back up my belief but it is good idea to verify the data supports your beliefs (or learn that it doesn’t so you can update your beliefs).

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