Mortgage News in the Carolinas
Posts tagged Ben Bernanke
Fed Minutes Show An Improving U.S. Economy Threatened By The Eurozone
026 days
by Geoff Brown
in Federal Reserve
The Federal Reserve has released the minutes from its most recent Federal Open Market Committee meeting. The Fed Minutes are a detailed meeting recap; the companion piece to the more brief, more well-known press release.
As a comparison, the minutes of the last FOMC meeting contained 60 paragraphs and 7,027 words. The post-meeting press release was just 5 paragraphs and 382 words.
December’s Fed Minutes shows Fed members with a positive, cautious, take on the economy.
Recent data suggests that the U.S. economy is expanding, the Fed said, but “strains” in global financial markets pose “significant risks” to the downside. This tell us that the Fed believes its economy-stimulating programs are working, but that officials remained concerned by events in the Eurozone.
The U.S. economy could be impacted by fallout.
Other meeting consensus included :
- On growth : The economy is expanding, despite slowing in “global economic growth”
- On housing : Data suggests the “depressed” market “could be improving”
- On inflation : Prices are stable, and remain within tolerance levels
The Fed’s analysis was of little surprise to Wall Street, and going forward, Fed Chairman Ben Bernanke wants to keep it that way. The Fed Minutes contained a passage regarding market communication, and how the Fed will be more pro-active about it in the future.
With the release of its minutes, in a section called “Market Policy Communications”, the Federal Reserve showed its plans to release 4 times annually its economic forecasts, and plans for the Fed Funds Rate. This signals in a shift in Federal Reserve transparency.
The Federal Reserve will begin including the forecast in its economic projections beginning after its next policy meeting, January 24-25, 2012.
Mortgage rates in Carolinas were little changed after the release of the Fed Minutes.
A Simple Explanation Of The Federal Reserve Statement (September 21, 2011 Edition)
0139 days
by Geoff Brown
in Federal Reserve
Wednesday, the Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.
The vote was 7-3 — the second straight meeting at which the FOMC adjourned with as many 3 dissenters. Prior to that last meeting, there hadn’t been 3 FOMC dissenters since 1992.
In its press release, the Federal Reserve presented a dour outlook for the U.S. economy, noting that since its last meeting in August:
- Economic growth “remains slow”
- Unemployment rates “remain elevated”
- The housing sector “remains depressed”
The Fed also said that there are “significant downside risks” to the economic outlook, tied to strains in the global financial markets.
The news wasn’t all bad, however.
The Fed noted that business investment in equipment and software continues to expand, and that inflationary pressures on the economy appear to have stabilized. The Fed then re-iterated its plan to leave the Fed Funds Rate in its current range near 0.000 percent “at least until mid-2013″. This means that Prime Rate — the rate to which credit card rates and lines of credits are often tied — should remain unchanged at 3.250 for at least another 2 years.
Furthermore, as expected, the Federal Reserve launched a market stimulus plan aimed at lowering long-term interest rates. The Fed will sell $400 billion in Treasury securities with a maturity of 3 years or less, and use the proceeds to buy the same with maturity between 6 and 30 years.
Mortgage market reaction to the FOMC statement has been positive this afternoon. Mortgage rates in Carolinas are improving, but note that Wall Street sentiment can shift quickly — especially in a market that’s as uncertain as this one.
If today’s mortgage rates and payments fit your household budget, consider locking in a rate. Rates can change swiftly.
The FOMC’s next meeting is a 2-day affair, scheduled for November 1-2, 2011.
What’s Ahead For Mortgage Rates This Week : September 6, 2011
0154 days
by Geoff Brown
in Mortgage Rates
Rates were especially volatile, too, with the long Labor Day Weekend looming.
Overall, conforming mortgage rates in Carolinas improved for the first time in 3 weeks. On a product-by-product basis, though, mortgage rates are faring differently.
According to the Freddie Mac weekly mortgage rate survey, last week, the 30-year fixed rate mortgage was unchanged but the 15-year fixed rate mortgage and the 5-year ARM fell.
The 5-year ARM is at a new all-time low for qualified borrowers.
A drop in 5-year ARM rates throughout Charlotte without a corresponding drop in 30-year fixed mortgage rates signals that markets expect the economy to stabilize over the long-term but with weakness in the near-term. The 5-year ARM’s ultra-low rates suggests marked weakness ahead.
The 5-year ARM may get another boost this week, too.
While U.S. markets were closed for Labor Day, Eurozone nations were hit with new wave of sovereign debt concern, this time centered on Italy. Greece, Portugal and Ireland have already been the subject of debt default debate this year. Italy’s inclusion hit equity market hard and safe-haven buying re-commenced.
This should give a good start to mortgage rates this week. Look for rates to start lower. That’s not to say, however, that they’ll finish the week lower. With very little economic data due for release, markets will move on momentum and momentum can change in a flash.
The two biggest potential market movers both come Thursday. Fed Chairman Ben Bernanke speaks in Minnesota at 1:00 PM, and United States President Barack Obama addresses the nation at 7:00 PM. Both speeches are highly anticipated and should cause markets to move.
A Simple Explanation Of The Federal Reserve Statement (August 9, 2011 Edition)
0182 days
by Geoff Brown
in Federal Reserve
Tuesday, the Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.
The vote was 7-3 — the first time in 5 meetings that the nation’s Central Bank was non-unanimous and the first time since 1992 that the FOMC adjourned with as many as three dissenters.
In its press release, the FOMC had little good to say about the U.S. economy, noting that since its last meeting in July:
- Growth has been “considerably slower” than expected
- Labor market conditions have deteriorated
- Household spendng has “flattened”
The Fed also noted that the housing sector remains depressed.
On the positive side, the Fed said that business investment in equipment and software continues to expand, and that energy costs have dropped and no longer contribute to inflationary pressures on the economy.
In fact, the Fed worries that inflation may be running too low for the country’s good.
To that end, the Federal Reserve has pledged to keep the Fed Funds Rate in its current range near 0.000 percent “at least until mid-2013″. This is a departure from prior statements in which the Fed gave no such date.
Mortgage market reaction to the FOMC statement has been positive this afternoon. Mortgage rates in Carolinas are improving, but note that sentiment can shift quickly — especially in a market as uncertain as this one.
If today’s mortgage rates look good in your household budget, consider locking in a rate.
The FOMC’s next scheduled meeting is September 20, 2011.
