What the most recent rate hike means Last Wednesday, the Federal Reserve voted to raise interest rates by 0.25 percent. They set the rate for the overnight exchange of money by banks. Although this is not the same as a mortgage rate, over time, it will have an impact. Usually it is anticipated and already built in to rates by the time the Fed votes. Then on Thursday, long term mortgage rates fell! Why? Jay Vorhees from JVM Lending entertains the idea that it may have created more “certainty,” which bond markets love, or the idea that markets may have overreacted previously. In addition, the Fed gave no indication that it would change course in the future with respect to additional rate hikes. This hike is the first of three planned ones in 2017, plus three more for 2018 as well.