These minutes outline the meeting and are typically released 3 weeks post meeting. During FOMC meetings, member discuss the state of the economy based on their most recent available data and vote on forward moving measures.

FOMC Minutes Summary

The FOMC minutes revealed that the members are watching the market with a wait and see attitude before making changes to its current policy stance. This means that any future easing by the FOMC is on hold for now.

You may here market watchers refer to market easing as QE3, which is short for the third round of quantitative easing or “quantitative easing 3″. Quantitative easing refers to certain monetary policy actions the FOMC can use to help stimulate the economy.

The FOMC also indicated that they are not fully confident that the employment growth the market has seen thus far will continue.

Mortgage Rate Reaction to the FOMC

The markets reacted strongly to the FOMC minutes with a fast rise in mortgage rates. The FOMC statements were a bit of a surprise to the markets since the statements about no further easing in the short term seemed for some to conflict with past statements made by the FOMC.

Where Are Mortgage Rates Now?

If we posted the current mortgage rates at the time of this writing, there is a very high likelihood they would be out of date by the time you read this since mortgage rates can change many times each day. Please request a free mortgage rate quote using the form above or call us directly to get up to the minute mortgage rate updates.

Some Fed members are speaking as well and the market is always listening for good or bad updates from Europe.

Economic Calendar for Week of January 9, 2012

• Monday - Consumer Credit
• Tuesday - Wholesale Trade
• Wednesday - EIA Petroleum Status Report, Beige Book
• Thursday - Jobless Claims, Retail Sales, Treasury Budget
• Friday - International Trade, Consumer Sentiment, Import & Export Prices

Should I Lock Now or Wait?

Since mortgage rates are very close to their all time historical lows, there is likely much more to gain by locking now then by waiting. It only takes one piece of news to push rates up and when they move up, they move much faster than they move down. That being said, the market may have changed by the time you’ve read this, so calling us is the most sure way to get the most up to the date guidance in whether locking makes sense for you and what loan program best fits your needs.

The Federal Open Market Committee (FOMC) Meets

The Federal Open Market Committee (FOMC) met this week and as expected, they left key short term interest rates alone. The Fed Funds Rate (the rate at which banks lend money to each other) is still at 0.000% to 0.250%. The committee has said it believes the economy is growing moderately and that employment will continue to improve, albeit at a slower than desirable pace.

The FOMC also indicated that there are some areas of concern that might affect the US Economy moving forward such as slowing in global growth and concerns in business investment.

Mortgage Rates Moving Forward

Will rates be higher or lower next week? The truth is that nobody knows. We do know that since we are at all time historic lows, there is limited upside in waiting for rates to improve. On the other hand, there is substantial risk that rates will move higher if you wait.

Should you lock now? What is the best program for your needs? We can answer these questions and more with a free consultation where we can put together a strategy to that best fits your unique needs.

Putting Mortgage Rates Into Perspective

Since it is quite easy to hear how low mortgage rates are but not understand how low they are in a historical context, we have been hard at work creating some charts that we will be releasing in the coming weeks documenting the history of mortgage rates. Sometimes it take a chart to truly understand how low and historic the mortgage market we are in is.

Economic Calendar for Week of December 12, 2011

• Monday - Treasury Budget
• Tuesday - Retail Sales, Business Inventories, FOMC Meeting Announcement
• Wednesday - Import and Export Prices
• Thursday - Jobless Claims, Producer Price Index, Industrial Production, Philadelphia Fed Survey

Mortgage Rates and the Best Program For Your Needs

We commonly speak with homeowners that are confused about which program is best for them or what size loan they qualify for. We also find that many are confused about rate locks and when and if they should lock in their mortgage rate.

If you need a free professional consultation to put together a mortgage strategy that fits your needs the best, we can help. Now is a critical time to learn about your options if you are on the fence or unsure about what move, if any, you should make in regards to refinancing your existing or locking in a rate for a new mortgage. Mortgage rates are at historical all time lows, don’t miss the opportunity to take advantage of this unique market!

Some Key Points From the FOMC Press Release:

• “Economic growth strengthened somewhat in the third quarter, reflecting in part a reversal of the temporary factors that had weighed on growth earlier in the year.”
• “Investment in nonresidential structures is still weak.” This is referring to commercial real estate. 
• The Housing sector remains “depressed”.

The Role of the FOMC

The FOMC or FED is responsible for setting monetary policy in the United States. Its actions can exert incredible force on the bond and equities markets as well as mortgage rates. Since the FED sets monetary policy and participates in other activities such as buying Treasury debt, their activities can significantly impact the mortgage rates and the economy as a whole.

As the FED has implemented various policies to help push the economy out of recession, maintaining these policies for an extended period of time can do more damage than good.

From the FOMC Press Release: 

Information received since the Federal Open Market Committee met in September indicates that economic growth strengthened somewhat in the third quarter, reflecting in part a reversal of the temporary factors that had weighed on growth earlier in the year. Nonetheless, recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated. Household spending has increased at a somewhat faster pace in recent months. Business investment in equipment and software has continued to expand, but investment in nonresidential structures is still weak, and the housing sector remains depressed. Inflation appears to have moderated since earlier in the year as prices of energy and some commodities have declined from their peaks. Longer-term inflation expectations have remained stable.

Mortgage Rates Moving Forward

Renewed worries over a resolution in the Eurozone debt default crisis have helped keep rates from rising. This concern along with general concerns over the health of the United States economy have help keep rates at near all time historic lows. Since rates will move up quickly when they move up, locking in your rate may be a good idea. Not sure if you should lock or what type of loan is best for your scenario? We can help answer those questions and more and custom taylor a strategy based on your needs.

A Week Waiting For Ben, What Did He Say?

This week has been one marked by a market holding its breath, waiting for Federal Reserve Chairman, Ben Bernanke to speak this morning.

From Ben’s Speech (view speech here):

Normally, monetary or fiscal policies aimed primarily at promoting a faster pace of economic recovery in the near term would not be expected to significantly affect the longer-term performance of the economy. However, current circumstances may be an exception to that standard view–the exception to which I alluded earlier. Our economy is suffering today from an extraordinarily high level of long-term unemployment, with nearly half of the unemployed having been out of work for more than six months. Under these unusual circumstances, policies that promote a stronger recovery in the near term may serve longer-term objectives as well. In the short term, putting people back to work reduces the hardships inflicted by difficult economic times and helps ensure that our economy is producing at its full potential rather than leaving productive resources fallow. In the longer term, minimizing the duration of unemployment supports a healthy economy by avoiding some of the erosion of skills and loss of attachment to the labor force that is often associated with long-term unemployment.

Ben Also Remarked About the Negative Impact of Congress’s Behavior During Debt Ceiling Debacle:

The negotiations that took place over the summer disrupted financial markets and probably the economy as well, and similar events in the future could, over time, seriously jeopardize the willingness of investors around the world to hold U.S. financial assets or to make direct investments in job-creating U.S. businesses.

Summary of Ben’s Speech

1. Economy isn’t deteriorating fast enough to warrant further stimulus. This is seen as being positive by some, if the market were in worse shape yet, further stimulus would be needed.
2. Economic growth during the first half of this year was considerably slower than the Federal Open Market Committee had been expecting.
3. Progress towards recovery is occurring albeit much slower than expected.

How Does This Affect Me and My Mortgage?

Rates are moving upward and away from record lows, which means now is the time to lock in a low mortgage rate while we are still near record low levels. Rates are expected to move very fast when they do make their push upward, so do not gamble with locking in savings now.

The minutes didn’t drop any bombshells that have had any significant immediate impact on mortgage rates, but did provide useful insight on how the Fed will be adjusting its activities, which will affect how mortgage rates move in the future. The market and mortgage rates as a whole were largely unmoved release of the minutes.

The Fed overview on the current state of the market shows that recovery has been slower than expected and that housing prices remain depressed, both factors holding back the overall recovery of the economy.

From the June 2011 FOMC Minutes:

Activity in the housing market remained depressed, as both weak demand and the sizable inventory of foreclosed or distressed properties continued to hold back new construction. Starts and permits of new single-family homes were essentially unchanged in April and May, and they stayed near the very low levels seen since the middle of last year. Sales of new and existing homes remained at subdued levels in recent months, while measures of home prices fell further.

Since the Fed sets monetary policy and participates in other activities such as buying Treasury debt, their activities can significantly impact the mortgage rates and the economy as a whole. As the Fed has implemented various policies to help push the economy out of recession, maintaining these policies for an extended period of time can do more damage than good. The June minutes provided some insight into how the Fed will unwind or exit some of these policies moving forward.

Fed Exit Strategy Principles

1. The Fed will raise the Fed Funds Rate (the rate at which banks lend each other money overnight)
2. The Fed will stop buying Treasury Debt (they are currently reinvesting the proceeds on existing obligations)
3. The Fed will sell its holdings in mortgage-backed securities

Since rates are currently at very low levels, there is a lot more room for rates to go up then go down. That means that now is a great time to inquire about whether your existing mortgage is the best fit for you or to learn about your options if you are considering purchasing a home.

The second positive event was that the Federal Open Market Committee left the Fed Funds Rate (interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions) unchanged at .000% – .250% while lowering it expectations of growth in the future for the US economy. While the expectations growth outlook was not positive news for the economy as a whole, it is good for mortgage rates, which move lower in times of economic uncertainty or turmoil.

Economic Calendar for Week of June 27, 2011

• Monday – Personal Income & Outlays Report for May, Kocherlakota and Koenig from the Fed speak, 2 Year Treasure Note Auction
  
• Tuesday – Case-Shiller 20-city Index, 5 Year Treasure Note Auction
• Wednesday – Consumer Confidence, Pending Home Sales, 7 Year Treasure Note Auction
• Thursday – Initial Jobless Claims
• Friday – Construction Spending

Not sure if you are in the best mortgage for your needs? We can give you the information you need to decide which options make the most sense for your current or future mortgage. Mortgage rates have continued to maintained low levels for months, creating a great opportunity to lock in a low rate on new home purchases or refinances, now is a great time to take advantage of low rates before they inevitably begin to move higher.

As the Real Estate and financial markets continue to move up and down, mortgage rates can also be affected. Since mortgage rates are more closely tied to the bond markets, an up or down move in the stock market may not have the result in mortgage rates that one might expects. In fact, many times the resulting mortgage rate changes are counter-intuitive.

More importantly, rates change daily and they can change quickly. Some mortgage professionals have recently noted that their rate quotes have only had shelf lives of three to four hours before market changes have deemed them inaccurate.

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How does a consumer navigate fast changing markets in order to refinance their existing loan or purchase a home with the most favorable terms possible?

1. Plan – Define your needs ahead of time, do not wait until the last minute. This is especially true of home purchases.
2. Consult – Talk to your mortgage professional on a regular basis so they can interpret recent market events to you and communicate how those events can affect you.
3. Execute – When you have defined your needs and have determined that now is the best time to move forward, don’t shop yourself out of a good loan! What does this mean? It is easy to get caught up in shopping for the best rate, but it is not uncommon for home owners to miss locking their loan at a great rate because they are in search of better rates that do not exist or that they do not qualify for. It is important to shop to insure you are getting the best rate possible, but set limits to the number of companies you are going to consider doing business with and be careful of having your credit report needlessly and more times than is necessary!