another Fed rate increase

Yesterday, the Federal Reserve raised interest rates again for the eighth consecutive time. The Federal Funds Rate is now at 3%, up from just 1% last year. This is the rate which banks borrow from. The last time this was higher was back in October 2001.

The Fed said yesterday that it looks to continue on its "measured path" of increases, which will likely mean a Fed rate of 4% by the end of this year.

The Fed also noted that U.S. consumer spending has slowed, oil and gas prices have risen, and inflation is a concern.

Here a some interesting & related facts:

• Despite the Fed's consistent rate increases, the 30-year fixed mortgage rate has actually gone down since April 29. According to Freddie Mac, the average 30-year fixed mortgage is currently at 5.78% (with 0.60 points). Compare that to 6.25% when the Fed started raising rates in June 2004.
• Nearly 1/3 of all new mortgages (in the US) are interest-only mortgages. In states like California, Nevada, and Virginia where property values have nearly trippled in the past 5 years, about about half of all new mortgages are interest only.