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November 4th, 2009Categories: Georgia Mountain Real Estate VIEWS, Mortgage & Finance reVIEWS

The Federal Open Market Committee voted to leave the Fed Funds Rate within its target range of 0.000-0.250 percent.

In its press release, the FOMC noted that the U.S. economy “has continued to pick up” since the September FOMC meeting and that housing market activity has increased.

It’s the third consecutive post-FOMC statement in which the Fed speaks optimistically about the U.S. economy – a signal that the recession is likely over.

The economy isn’t without threats, however, and the Fed identified several in its announcement, including:

1. Ongoing job losses for American workers
2. Reduced fixed investment by businesses
3. Ongoing challenges for the financial markets

The overall tone remained positive, however, as inflation appears to be held in check.

Also in its statement, the Fed confirmed its plan to hold the Fed Funds Rate near zero percent “for an extended period” and to honor its $1.25 trillion commitment to the mortgage bond market.

The Fed plans to wind down its mortgage market support over the next 5 months, reaffirming its March 2010 exit date.  For now, Fed support helps hold mortgage rates down.

Mortgage market reaction to the Fed’s press release is negative overall.  Mortgage rates are rising.

The FOMC’s next scheduled meeting is December 15-16, 2009.

Tags: Business, Economy of the United States, Federal funds rate, Federal Open Market Committee, Federal Reserve System, Inflation, Mortgage, United States

Written by Chad Lariscy//Discussion: Please leave a comment.

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May 22nd, 2009Categories: Georgia Mountain Real Estate VIEWS, Mortgage & Finance reVIEWS

Rates go up, rates go down.  Catch them while you can.

After Wednesday’s mortgage market rally drove rates down by a bunch, Thursday’s sell-off pushed them right back up.

This has been a common pattern in the skittish world of mortgage rates this year.

With the U.S. economy still teetering between recession and growth, markets are looking for signals anywhere it can find them.  Thursday’s clue came from a government report showing that more Americans are collecting unemployment benefits than at any point in history.

Strangely, mortgage rates rose on the news.

I call it “strange” because weak economic data has tended to draw mortgage rates lower lately to the benefit of prospective home buyers and would-be refinancers. Lower rates make homes more affordable.

Thursday, though, the pattern broke.

The main reason why mortgage rates rose Thursday isn’t because of the employment report or any other piece of data.  Rates rose Thursday for the same reason that they had dropped the day prior — the Federal Reserve.

On Wednesday, the released minutes from the Fed’s last meeting suggested that the group might make a larger mortgage market intervention.  On Thursday, in the face of worsening jobs data, markets bet the Fed wouldn’t.

Mortgage rate shoppers, unfortunately, got caught in the crosshairs.

Rates can — and do — change quickly, without warning.  And, thus far this year, the changes have been extra sudden.  This is one reason why it’s often prudent to lock a mortgage rate as soon as you find one that’s agreeable.  Wait too long, and it could be gone.

Expect more volatility today with traders leaving early for Memorial Day Weekend.  Less volume means more chances for rates to change.

Tags: Economy of the United States, Federal Reserve System, FederalReserve, Job Loss, Mortgage, Mortgage Rate, Mountain, Recession, Rise, Unemployment

Written by Chad Lariscy//Discussion: Please leave a comment.

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