Archive for FOMC
The Federal Open Market Committee adjourns from its 6th scheduled meeting of the year today, and 7th overall.
Upon adjournment, Federal Reserve Chairman Ben Bernanke will release a formal statement to the market. In it, the Fed is expected to announce “no change” to the Fed Funds Rate.
Currently, the Fed Funds Rate is within a target range of 0.000-0.250 percent. It’s been at this same level since December 2008.
Note that the Feds Funds Rate is not “a mortgage rate” — nor is it a a consumer rate of any kind. The Fed Funds Rate is a rate that defines the cost of an overnight loan between banks. And, although the Fed Funds Rate has little direct consequence to everyday Lake Geneva real estate homeowners, it is the basis for Prime Rate, the interest rate on which most consumer cards are based, plus many business loans, too.
Therefore, because the Fed Funds Rate won’t change today, neither will credit card rates. Mortgage rates, however, are a different story. Lake Geneva mortgage rates should change today — regardless of what the Fed does.
It’s more about what the Fed says.
In its statement, the Federal Reserve will highlight strengths and weaknesses in the economy, and threats to growth over the next few quarters. Depending on how Wall Street interprets these remarks, Lake Geneva real estate mortgage rates may rise or fall.
If the Fed’s comments signal better-than-expected growth, bond markets should lose and mortgage rates should rise. Conversely, if the Fed’s comments signal worse-than-expected growth, mortgage rates should fall.
If you’re actively shopping for a Lake Geneva mortgage, it may be prudent to lock your rate ahead of the Fed’s announcement today. The Fed adjourns at 2:15 PM ET. Call me to lock your rate.
The Fed meets 8 times annually.
Lake Geneva Mortgage Rates Higher Based On Fed’s August Minutes
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Home affordability took a slight hit this week after the Federal Reserve’s release of its August 10 meeting minutes.
The “Fed Minutes” is a lengthy, detailed recap of a Federal Open Market Committee meeting, not unlike the minutes published after a corporate conference, or condo association gathering. The Federal Reserve publishes its meeting minutes 3 weeks after a FOMC get-together.
The minutes are lengthy, too.
At 6,181 words, August’s Fed Minutes is thick with data about the economy, its current threats, and its deeper strengths. The minutes also recount the conversations that, ultimately, shape our nation’s monetary policy.
It’s for this reason that Lake Geneva real estate mortgage rates are rising. Wall Street didn’t see much from the Fed that warranted otherwise.
Among the Fed’s observations from its minutes:
- On the economy : The recession was deeper than previously believed
- On jobs : Private employment is expanding slowly
- On housing : The market was “quite soft” in June
Now, none of this was considered “news,” per se. If anything, investors were expecting for harsher words from the Fed; a bleaker outlook for the economy. And, because they didn’t get it, monies moved to stocks and mortgage bonds lost.
That caused Lake Geneva mortgage rates to rise.
The Fed meets 8 times annually. Its next meeting is scheduled for September 21, 2010. Until then, mortgage rates should remain low and home affordability should remain high. There will be ups-and-downs from day-to-day, but overall, the market is favorable.
A Simple Explanation Of The Federal Reserve Statement (August 10, 2010 Edition)
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Today, in its first meeting in 6 weeks, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged.
The Fed Fund Rate remains at a historical low, within a prescribed target range of 0.000-0.250 percent.
In its press release, the FOMC said that, since June, the pace of economic recovery “has slowed.” Household spending is increasing but remains restrained because of high levels of unemployment, falling home values, and restrictive credit.
Today’s statement shows less economic optimism as compared to the prior year’s worth of FOMC statements dating back to June 2009. The Fed is looking for growth to be “more modest in the near-term” than its previous expectations.
Weaknesses aside, the Fed highlighted strengths in the economy, too:
- 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. Lake Geneva mortgage rates for Lake Geneva real estate are unchanged this afternoon.
The FOMC’s next meeting is scheduled for September 21, 2010.
Should You Float Or Lock Your Lake Geneva Mortgage Rate? The Fed Is Meeting Today.
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The Federal Open Market Committee holds a one-day meeting today, its fifth scheduled meeting of the year, and sixth overall since January.
The FOMC is the government’s monetary policy-setting arm and the group’s primary tool for that purpose is an interest rate called the Fed Funds Rate.
The Fed Funds Rate is the prescribed rate at which banks borrow money from each other and, since December 16, 2008, the Federal Reserve has voted to keep the benchmark rate within a target range of 0.000-0.250 percent.
It’s the lowest Fed Funds Rate in history.
Because the Fed Funds Rate is near zero, it’s accommodative of economic growth, spurring businesses and consumers to borrow money on the cheap. This, in turn, fosters economic growth within a U.S. economy that is somewhat tentative and facing headwinds.
The Fed has said over and again that it will hold the Fed Funds Rate “exceptionally low” for as long as conditions warrant. It’s expected that the Fed will reiterate that message in today’s post-meeting press release.
However, just because the Fed Funds Rate won’t be changing today, that doesn’t mean that Lake Geneva mortgage rates won’t. Mortgage rates are not set by the Federal Reserve; open markets make mortgage rates.
Mortgage rates for Lake Geneva real estate tend to be volatile when the Fed is meeting. This is because the Fed’s press release highlights strengths and weaknesses in the economy and, depending on how Wall Street views those remarks, bond markets can undulate and Lake Geneva mortgage rates are based on the price of mortgage-backed bonds.
When Ben Bernanke & Co. speak, Wall Street listens.
The Fed’s press release today will be dissected and analyzed. Talk of higher-than-expected inflation, or better-than-expected growth should have a negative effect on rates. Talk of an economic slowdown may help rates to fall.
Either way, we can’t be certain what the Fed will say or do this afternoon so if you’re floating a Lake Geneva mortgage rate right now and wondering whether the time is right to lock, the safe choice is to lock before 2:15 PM ET today.
The Fed’s June Minutes Keep Lake Geneva Mortgage Rates In Rally-Mode
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According to Freddie Mac, Lake Geneva mortgage rates made new all-time lows this week and the good news is that rates look poised to fall even more.
Since the Federal Reserve’s release of its June 2010 meeting minutes Wednesday, Lake Geneva mortgage rates are dipping even more and one of the main reasons why is because of some choice Fed words.
If you’ve never seen a Fed Minutes release, it reads academic. The document is page after page of stats, facts and figures about the U.S. economy, accompanied by an in-depth recap of the intra-Fed member debates that shape the nation’s monetary policy.
At 7,333 words, the June Fed Minutes is the unabridged version of the more well-known, post-meeting press release. The corresponding press release was just 360 words.
As it turns out, Wall Street didn’t like what it read in the minutes. Specifically:
- The Fed expects below normal growth through 2012
- The Fed’s outlook for employment has dipped
- Credit conditions are easing only slowly
Furthermore, the Fed said its action may be needed if the economy were “to worsen appreciably”.
Overall, the economic optimism the Fed displayed earlier this year appears to be waning. The economy is moving forward — just not as quickly as expected. That should bode well for mortgage rates and home shopping for Lake Geneva real estate.
Mortgage rates were down Wednesday afternoon and Thursday and remain historically low. All it would take to reverse rates, however, is a run of positive news on jobs, growth, and consumer spending. Therefore, if you know you need to lock a Lake Geneva mortgage rate in the near-term, it may be a good time to make the call.
Lock your mortgage rate and move on.
The Fed’s April Minutes Push Lake Geneva Mortgage Rates Even Lower
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After starting the day in the red, Lake Geneva mortgage rates rebounded Wednesday afternoon after the Federal Reserve released its April 27-28, 2010 meeting minutes.
It’s good news for home buyers and would-be refinancers who either are looking for or own Lake Geneva real estate. Mortgage rates continue to troll along multi-year lows.
“Fed Minutes” are lengthy, detailed recaps of Federal Open Market Committee meetings, not unlike the minutes you’d see after a corporate conference, or condo association gathering. The Federal Reserve publishes Fed Minutes 3 weeks after each respective FOMC get-together.
The Fed meets 8 times annually.
Because of the minutes’ content and density, it’s of tremendous value to Wall Street and investors. Fed Minutes provide a glimpse into the conversations and debates that shape the country’s monetary policy.
The broad scope of the published meeting minutes are in sharp contrast to the more well-known, post-meeting press release which reads more like a policy summary.
And the extra words matter.
Here’s some of what the Fed discussed last month:
- On Greece: A crisis in Greece could slow U.S. domestic growth
- On housing: Despite government support, growth appears to have stalled
- On its mortgage buyback program: There’s little reason to sell mortgage bonds right now
When the markets saw the Fed Minutes, what had been a down day for bond markets turned positive. The less-than-sunny outlook for the near-term U.S. economy sparked bond sales, pushing prices higher.
Lake Geneva mortgage rates move opposite mortgage bond prices.
Wall Street is always in search of clues from inside the Fed about what’s next for the economy and post-FOMC minutes usually give good fodder. April’s meeting was no different.
For now, Lake Geneva mortgage rates remain near all-time lows but once the Eurozone issues are settled, rates are likely to rise. If you haven’t locked a mortgage rate, your window may be closing. Once the economy is turning around for certain, mortgage bonds will be among the first of the casualties.
A Lake Geneva Real Estate Rate-Locking Strategy For Today’s Fed Meeting
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The Federal Open Market Committee adjourns from a scheduled 1-day meeting today, its second of the year.
The FOMC has held the Fed Funds Rate in a target range of 0.000-0.250 percent since December 16, 2008, and the voting members of the Fed are expected to vote “no change” again today.
However, no change in the Fed Funds Rate doesn’t necessarily mean no change in mortgage rates. This is because the Fed Funds Rate is a different interest rate from the rates Lake Geneva real estate home buyers get from a loan officer.
- Fed Funds Rate : Short-term rate at which banks borrow from each other
- Mortgage Rate : Long-term rate of interest a homeowner pays on a mortgage
Lake Geneva real estate mortgage rates are more responsive to what the Fed says as compared to what the Fed does.
After each FOMC meeting, Fed Chairman Ben Bernanke & Co issue a formal press release to the markets. At roughly 400 words, the statement is a brief commentary on the strengths, weaknesses, and threats for the U.S. economy.
Wall Street watches the statement with great interest and this is why mortgage rates are often volatile on the days of an FOMC adjournment. One mention of a word like “inflation” and traders rush to dump their mortgage bond positions.
Inflation is the enemy of mortgage rates.
I say again, “inflation is the enemy of mortgage rates.”
After the Fed’s last meeting in January, it told us that the economy had “weakened further”, led by steep declines both in housing and employment. Global demand was off, too. The negative tone of the Fed’s statement caused Lake Geneva real estate mortgage rates to fall to near an all-time low.
This month, expect a less gloomy message.
Since January, there’s been a modest rebound in housing, employment appears more stable, and Retail Sales just posted huge gains. If the Fed alludes to improvement in any or all three, mortgage rates will likely reverse and zoom higher.
We can’t know what the Fed today will say so if you’re floating a mortgage rate and wondering whether to lock, the safe approach would be to do it today, prior to 2:15 PM ET.
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Asst Vice President
1221 South Shore Drive
Delavan, Wisconsin, 53115 US |
Work: 262-728-6209
Mobile: 262-745-5055
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Lender, Lake Geneva Real Estate
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