A June Rate Increase After All? We May Already Have One:- For those who invest in private notes or Invest in real estate for the long term, financing costs are an important part of your strategy. When the Fed Funds rate goes up, so do other rates, including private notes as well as conventional financing from lenders who approve loans using Fannie Mae andHas the market already priced in a 0.25% rate increase? We think so Freddie Mac guidelines.

As you’re probably aware, and even mentioned briefly in yesterday’s article, once the Fed makes a move, investors have already priced that rate increase in anticipation of the next. When markets expect a Fed rate bump by 0.25%, rates go up before the rate move is even made.

Let’s look at a real world example. Bond yields overall have risen year to date and are moving higher based upon expectations of a rate increase. Some are even thinking it’s best to just go ahead and raise rates and move on. 30 year mortgage rates are at their highest levels of the year. The current index for a 30 year conforming interest rate for a home is the FNMA 3.0 coupon. Just this week, the price has fallen by about 100 basis points. 100 basis points will typically result in a rate increase of—0.25%. The very same as what many anticipate the Fed’s first rate increase will be.

Financing costs for all types of properties will be on the rise and if they follow current trends, will stay at these higher levels until further data can be analyzed. What sort of data? Tomorrow’s unemployment picture might just be the catalyst for a bond selloff. If the number of new jobs created is anything closer to 300,000, we might see another rate increase of 0.25% and expectations the Fed might go ahead and make a rate move this month at the conclusion of their two-day FOMC meetings.