Mortgage News in the Carolinas
FOMC
A Simple Explanation Of The Federal Reserve Statement (December 14, 2010 Edition)
0522 days
by Geoff Brown
in FOMC
Today, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged within in its target range of 0.000-0.250 percent.
In its press release, the FOMC noted that since November’s meeting, the “economic recovery is continuing”, but at a pace deemed too slow to make a material impact on unemployment rates. It also said that household spending in increasing, but remains constrained by joblessness, tight credit and lower housing wealth.
In addition, the Fed used its press release to re-affirm its plan to keep the Fed Funds Rate near zero percent “for an extended period” while also opting to keep its $600 billion bond market support package in place.
And lastly, of particular interest to home buyers and mortgage rate shoppers, the FOMC statement devoted an entire paragraph to the Federal Reserve’s dual mandate of keeping inflation and employment at acceptable levels.
The Fed acknowledges making progress toward this goal, but calls it “disappointingly slow”. Currently, inflation is too low for what the Fed deems acceptable, and unemployment is too high.
Over time, the Fed expects both measurements to improve.
Mortgage market reaction to the FOMC statement has been negative thus far. Mortgage rates in Charlotte are unchanged post-FOMC, but appear poised to worsen.
The FOMC’s next scheduled meeting is a 2-day affair, January 25-26, 2011. It’s the first scheduled meeting of 2011.
A Simple Explanation Of The Federal Reserve Statement (November 3, 2010 Edition)
0563 days
by Geoff Brown
in FOMC
Today, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged within in its target range of 0.000-0.250 percent.
In its press release, the FOMC noted that, since September’s meeting, the pace of economic and job growth “continues to be slow”. Housing starts are “depressed”, income growth is “modest” and commercial real estate investment is “weak”.
With respect to its prior economic stimuli, the Fed deemed the recovery “disappointingly slow”, while, at the same time, noting that growth will come.
The Fed also noted that inflation is running lower that what’s optimal, hinting at the potential for deflation.
Lastly, the Fed re-acknowledged its plan to hold the Fed Funds Rate near zero percent “for an extended period”, and also announced a new, $600 billion support package for the bond market. In most instances, a move like this would drive mortgage rates lower, but the Fed’s stimulus had been widely telegraphed, and $600 billion isn’t too far from the initial package estimates.
Mortgage market reaction has been muted thus far. Mortgage rates in Charlotte are unchanged post-FOMC, but looked poised to worsen.
The FOMC’s next scheduled meeting is December 14, 2010. It’s the last scheduled meeting of the year.
Mortgage Rate Lock Alert : Expect Rate Changes Wednesday Afternoon
0564 days
by Geoff Brown
in FOMC
The Federal Reserve ends a scheduled, 2-day meeting today. It’s the seventh of 8 scheduled Fed meetings in 2010, and the eighth overall this year.
The Fed held an unscheduled meeting May 9, 2010.
When today’s meeting adjourns, Fed Chairman Ben Bernanke & Co. will publish a formal statement within which the Fed is expected to announce “no change” to the Fed Funds Rate. But that doesn’t mean that mortgage rates won’t change.
To the contrary, expect mortgage rates to move by a lot this afternoon. Here’s why.
The Fed’s mission is to preserve stability within banking and the economy and, to achieve that goal, the Fed was bequeathed a number of powers by the U.S. government.
The most well-known of those powers is to right to set the Fed Funds Rate, the rate at which banks lend money to each other overnight.
Since December 2008, the benchmark Fed Funds Rate has been held in a range of 0.000-0.250 percent, the lowest possible range without going negative.
Now, when the Fed Funds Rate is low, it’s meant to loosen credit; to push the economy forward. And, by all accounts, the near-zero Fed Funds Rate is working. The recession ended and the economy is recovering.
However, the Fed has other stimulus-providing tools at its disposal and Wall Street expects the group to use them. This is where mortgage rates come into play.
Investors think the Fed will announce a new stimulus in its press release this afternoon and, dependent on the size of package, mortgage rates in Carolinas will either rise, or fall.
- If the package is worth more than $500 billion, rates are expected to fall
- If the package is worth less than $250 billion, rates are expected to rise
If the stimulus is somewhere in between, rates should idle.
Predicting mortgage rates is an inexact science, and guessing the Fed even moreso. Therefore, if you’re shopping for a mortgage rate right now, the prudent move is to lock it up prior to today’s 2:15 PM ET adjournment because, after to 2:15 PM ET, we can count on the Fed Funds Rate staying flat, but the same can’t be said for mortgage rates.
Call your loan officer this morning.
A Simple Explanation Of The Federal Reserve Statement (September 21, 2010 Edition)
0606 days
by Geoff Brown
in FOMC
Today, in its 7th meeting of the year, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged.
The Fed Funds Rate remains at a historical low, within a Fed’s target range of 0.000-0.250 percent.
In its press release, the FOMC said that the pace of economic recovery “has slowed” in recent months. Household spending is increasing but remains restrained by high levels of unemployment, falling home values, and restrictive credit.
For the second straight month, the Federal Reserve showed less economic optimism as compared to the prior year’s worth of FOMC statements dating back to June 2009. However, the Fed still expects growth to be “modest in the near-term”.
This outlook is consistent with recent research showing that the recession is over, and that growth has resumed — albeit at a slower pace than what was originally expected.
The Fed also highlighted strengths in the economy:
- Growth is ongoing on a national level
- Inflation levels remain exceedingly low
- Business spending is rising
As expected, the Fed re-affirmed its plan to hold the Fed Funds Rate near zero percent “for an extended period”.
There were no surprises in the Fed’s statement so, as a result, the mortgage market’s reaction to the release has been neutral. Mortgage rates in Carolinas are thus far unchanged this afternoon.
The FOMC’s next meeting is a 2-day affair scheduled for November 2-3, 2010.
