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January 27th, 2010Categories: Georgia Mountain Real Estate VIEWS

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 strengthen”, that the jobs markets is getting better, and that financial markets are supportive of growth.

There was no mention of the housing market’s strength.  The last 3 statements from the Fed included that specific verbiage.

It’s the fifth straight statement in which the Fed spoke about the economy with optimism.  This should signal to markets that 2008-2009 recession is over and that economic growth is returning to U.S. economy.

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

1. Credit remains tight for consumers
2. Businesses are reluctant to hire new workers
3. Housing wealth is down

The message’s overall tone, however, remained positive and inflation appears is still within tolerance.

Also in its statement, the Fed confirmed its plan to hold the Fed Funds Rate near zero percent “for an extended period” and to wind down its $1.25 trillion commitment to the mortgage market by March 31, 2010.  This is noteworthy because Fed insiders estimate that the bond-buying program suppressed mortgage rates by 1 percent through 2009.

Mortgage market reaction to the Fed press release is, in general, negative. Mortgage rates in Blairsville are rising this afternoon.

The FOMC’s next scheduled meeting is March 16, 2010.

Tags: Add new tag, Economic growth, Fed Funds Rate, Federal funds rate, Federal Open Market Committee, Federal Reserve System, FOMC, Mortgage

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

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January 27th, 2010Categories: Mortgage & Finance reVIEWS

The Federal Open Market Committee ends a scheduled, 2-day meeting today in Washington. It’s the first of 8 scheduled meetings for the policy-setting group in 2010.

The group adjourns at 2:15 PM ET.

As is customary, upon adjournment, the Fed will issue a press release to the markets recapping its views of the country’s current economic condition, and the outlook for the near-term future.

The post-meeting statements from the Fed are brief but comprehensive. And Wall Street eats them up.  Every word, sentence and phrase is carefully dissected in the hope of gaining an investment edge over other active traders.

It’s for this reason that mortgage rates tend to be jittery on days the FOMC adjourns. Wall Street is frantically re-balancing its bets.

Today should be no different.

The FOMC is expected to leave the Fed Funds Rate within its target range of 0.000-0.250 percent — the lowest it’s been in history.  However, it’s what the Fed says Wednesday that will matter more than what it does.

After the Fed’s last meeting in December, it made several observations:

1. The jobs market is getting “less worse”
2. The housing sector is making improvements
3. Financial markets are stabilizing further

The economy is gradually improving, the Fed told us, but there are still risks to the economy ahead.  Furthermore, inflation remains in check.

As compared to December’s press release, today’s FOMC statement will be closely watched. If the Fed changes its verbiage in any way that alludes to strong growth and/or inflation in 2010, expect mortgage rates in Ellijay to rise as Wall Street moves its money from bonds to stocks.

Conversely, reference to slower growth in 2010 should lead rates lower.

We can’t know what the Fed will say so if you’re floating a mortgage rate right now or wondering whether the time is right to lock, the safe approach would be to lock prior to 2:15 PM ET Wednesday. After that, what happens to rates is anyone’s guess.

Tags: Add new tag, Economy, Federal funds rate, Federal Open Market Committee, Federal Reserve System, FOMC, Inflation, Mortgage, Mortgage Rates, Wall Street

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

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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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August 14th, 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.

It also reiterated plans to support the mortgage market to the tune of $1.5 trillion.

In its press release, the FOMC noted that the U.S. economy is ”leveling off” and that financial markets continue to improve.

The change in verbiage is the rosiest from the Fed since the start of the recession and it may signal that the downturn’s end is near.

That said, the Fed highlighted lingering economic soft spots that could still impact a recovery through the end of 2009 and into 2010.

1. Ongoing job losses
2. Reduced “housing wealth”
3. Tight credit conditions

Furthermore, rising energy costs remain a threat to inflation.

 

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.

Market reaction to the Fed’s press release is muted.  With no real change in message and a basic confirmation of what most investors already knew, Wall Street sees no reason to panic.  Mortgage rates are unchanged.

The FOMC’s next scheduled meeting is September 22-23, 2009.

Tags: Business, Fed Funds Rate, Federal funds rate, Federal Open Market Committee, Federal Reserve System, Financial market, Inflation, Mortgage

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

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June 24th, 2009Categories: Georgia Mountain Home Buyer's reVIEWS, Georgia Mountain Real Estate VIEWS, Mortgage & Finance reVIEWS

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

The Fed also reiterated its plan to support the mortgage market to the tune of $1.5 trillion.

In its press release, the FOMC noted that the U.S. economy is not slowing with the same speed versus just two months ago and that financial markets, in general, are improving. 

These are two signs that the country may be emerging from recession, if it hasn’t already.

The news isn’t all good, however.  The Fed made a point to highlight the potential hazards the nations faces on its path to economic recovery:

 

• The prices of energy and commodities have been rising
• Job losses are still mounting nationally
• Businesses are reducing capital expenditures

 

Also in its statement, the Fed acknowledged a plan to hold the Fed Funds Rate near zero percent “for an extended period” and a re-commitment to the U.S. Treasury and Mortgage Bond markets.

Market reaction to the Fed’s press release has been muted. 

With no new stimulus and no new “tools” to spur the economy unveiled, Wall Street is business as usual.  Mortgage rates are unchanged post-FOMC today.

The FOMC’s next scheduled meeting is August 11-12, 2009.

Tags: Business, Federal funds rate, Federal Open Market Committee, Federal Reserve System, Financial market, Mortgage, Recession, United States

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

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