Archive for Ben Bernanke
What’s Ahead For Lake Geneva Real Estate Mortgage Rates This Week: March 26, 2012
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Lake Geneva real estate mortgage markets carved out a wide range last week, eventually closing slightly worse. Mortgage-backed bonds sold off early in the week on rising investor sentiment. Then, they reversed higher on prepared remarks from Federal Reserve Chairman Ben Bernanke, which tempered Wall Street optimism.
When bonds prices rise, mortgage rates fall.
Conforming and FHA mortgage rates in Wisconsin edged higher on the week, and remain at a 5-month high.
According to Freddie Mac’s weekly Primary Mortgage Market Survey, the average 30-year fixed rate mortgage is now 4.08% and the 15-year fixed rate mortgage is now 3.30%. Both loan types require an accompanying 0.8 discount points, plus a full set of closing costs.
1 discount point is equal to one percent of your loan size.
Last week’s conforming mortgage rates represent a sharp increase from the week prior when rates for the 30-year fixed rate mortgage and 15-year fixed rate mortgage averaged 3.92% and 3.16%, respectively.
If you’ve been shopping for a 30-year fixed rate mortgage, the interest rate increase added $9.22 to your monthly payment per $100,000 borrowed.
We can’t know in what direction mortgage rates will move this week, but we can be certain they’ll be volatile. Wall Street is suddenly on edge, unsure of whether the economy is improving as recent data suggests, or if the Federal Reserve is correct in that threats to growth persist.
The week’s data schedule is as follows:
- Monday: Pending Home Sales Index
- Tuesday: Consumer Confidence; Case-Shiller Home Price Index
- Wednesday: Durable Goods
- Thursday: Initial Jobless Claims; GDP
- Friday: Personal Income and Outlays
In addition, there are 6 Federal Reserve speakers scheduled for the week, including Chairman Bernanke. Expect mortgage rates to change frequently throughout the week as Wall Street wrestles with data and rhetoric.
Although mortgage rates spiked last week, historically, they remain low. If you’re nervous that rates may rise more, consider locking something in.
Lake Geneva Real Estate – The Fed Meets Today; Protecting Your Housing Payment
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The Federal Open Market Committee meets today, its second of 8 scheduled meetings this year. As a Lake Geneva home buyer or would-be refinancing household in Geneva National, get ready for changing mortgage rates.
The Federal Open Market Committee is the 12-person sub-committee within the Federal Reserve that votes on the nation’s monetary policy. Led by Federal Reserve Chairman Ben Bernanke, the FOMC’s most prominent role is as steward for the Fed Funds Rate.
The Fed has said repeatedly that it intends to keep the Fed Funds Rate near 0.000 for an “extended period of time”, through 2014 at least.
Unfortunately, this doesn’t mean that Lake Geneva mortgage rates will remain low as well. Mortgage rates are not set by the Federal Open Market Committee. Mortgage rates are set by Wall Street.
As proof that the Fed Funds Rate is distinct from mortgage rates, consider that, since 2000, the difference between the Fed Funds Rate and the average, 30-year fixed rate mortgage rate has been as wide as 5.25% and as narrow at 0.50%.
If the Fed Funds Rate was tied to mortgage rates, the chart at right would be linear.
That said, the FOMC can influence mortgage rates.
After its meetings, the FOMC issues a standard press release to the public which reflects the group’s overall economic outlook. When the FOMC statement is generally “positive”, mortgage rates tend to rise in response. This is because investors often assume more risk in an improving economy and this can harm bond market prices — including those for mortgage-backed bonds.
Conversely, when the Fed is generally negative in its statement, mortgage rates can improve.
Since the FOMC’s last meeting, there has been little about which to be negative with the U.S. economy. Housing and manufacturing are improving; employment is higher; and global markets are regaining their respective footing. The Fed may make note of it. Or, it may not.
Regardless, mortgage rates are expected to move so consider locking your mortgage rate ahead of today’s 2:15 PM ET statement.
There too much risk in floating.
What’s Ahead For Mortgage Rates This Week : March 5, 2012
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Mortgage markets worsened last week as the U.S. economy continued to show that it’s in recovery, and as Federal Reserve Chairman Ben Bernanke publicly hinted at the same.
In a congressional testimony Wednesday, Chairman Bernanke suggested that new, Fed-led stimulus may not be imminent, surprising Wall Street analysts and market traders who, for months, have expected a third round of quantitative easing from the Fed.
Bernanke’s comments sparked a sharp bond market sell-off that briefly pushed conforming and FHA mortgage rates up 0.375% in Wisconsin.
Other relevant data from last week included :
- Core inflation rising 1.9% from last year, below the Fed’s 2.0% target
- Consumer confidence climbing to a 12-month high
- Initial jobless claims falling to a 47-month low
Also, the Pending Home Sales Index posted its highest reading since the end of the 2010 federal home buyer tax credit, suggesting a strong spring housing market.
The economy appears much improved over this time last year.
By the end of the week, mortgage rates had recovered somewhat, but still closed worse on the week. Mortgage rates are higher than their lows of the year.
According to Freddie Mac’s weekly mortgage rate survey, the average 30-year fixed rate mortgage is now 3.90% nationwide with an accompanying 0.8 discount points and a full set of closing costs. Borrowers in Lake Geneva wishing to pay no points, or fewer fees, should expect higher rates than the Freddie Mac average.
The average 15-year mortgage rate is 3.17% with 0.8 discount points and closing costs.
This week, mortgage rates should be volatile. There aren’t many new data points set for release, but the ones on the calendar are bona fide market-movers — especially Friday’s Non-Farm Payrolls Report.
More commonly called the “jobs report”, Non-Farm Payrolls data is closely watched because of the jobs market’s close ties to the health of the economy. Businesses have added jobs through 16 straight months and are expected to show another 210,000 added in February. If the actual number of net new jobs added exceeds 210,000, expect for mortgage rates to rise.
If the number falls short, watch for rates to fall.
A Simple Explanation Of The Federal Reserve Statement (January 25, 2012)
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Wednesday, the Federal Reserve’s Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.
The Fed Funds Rate has been near zero percent since December 2008.
For the third consecutive month, the Fed Funds Rate vote was nearly unanimous. Just one FOMC member dissented in the 9-1 vote, objecting only to the language used in the Fed’s official statement.
In its press release, the Federal Reserve noted that the the U.S. economy has “expanding moderately” since its last meeting in December 2011, adding that the growth is occurring despite “slowing in global growth” — a reference to ongoing economic uncertainty within the Eurozone.
The Federal Reserve expects moderate economic expansion through the next few quarters but is wary of “strains” from global financial markets, and these three threats to the U.S. economy :
- The housing sector remains “depressed”
- The unemployment rate remains “elevated”
- Fixed business investment has “slowed”
On the positive side, the FOMC said that household spending is rising and inflation remains in-check. The group also believes that employment will gradually improve nationwide going forward.
The Federal Reserve neither introduced new economic stimulus, nor discontinued existing market programs.
Immediately following the FOMC’s statement, mortgage markets rallied, pressuring mortgage rates to fall in and around Williams Bay.
Mortgage rates remain near all-time lows and, for homeowners willing to pay points plus closing costs, conventional, 30-year fixed rate mortgages can be locked at below 4 percent. If you’re in the process of buying or refinancing a home in Wisconsin , it’s a good time to lock a mortgage rate with your lender.
The FOMC’s next scheduled meeting is a one-day event slated for March 13, 2012.
A Simple Explanation Of The Federal Reserve Statement (December 13, 2011 Edition)
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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 nearly unanimous for the second straight month. Just one FOMC member dissented in the vote, favoring additional policy stimulus beyond what the Federal Reserve currently provides.
In its press release, the Federal Reserve sais that the the U.S. economy is improving, noting that since its November 2011 meeting, the economy has been “expanding moderately”. The Fed also added that domestic growth is occurring despite some “apparent slowing in global growth” — a nod to ongoing uncertainty within the Eurozone.
The Federal Reserve expects a moderate pace of growth over the next few quarters, and believes that the jobs market will continue to improve, but slowly.
Other potential soft spots within the economy include :
- A slowdown in business investment
- A “depressed” housing market
- Strains in global financial markets
The Federal Reserve added no new policies at its December meeting, and made no changes to existing ones. It re-iterated its plan to leave the Fed Funds Rate within its current range of 0.000-0.250 percent “at least until mid-2013″ and re-affirmed “Operation Twist” — the stimulus program through which the Fed sells Treasury securities with a maturity of 3 years or less, and uses the proceeds to buy mortgage bonds with maturity between 6 and 30 years.
Mortgage bonds are mostly unchanged since the Fed’s announcement, giving mortgage rates in Lake Geneva real estate little reason to rise or fall.
Mortgage rates remain near all-time lows and, for homeowners willing to pay points + closing costs, 30-year fixed rate mortgages can be locked at less than 4 percent. If you’re thinking of buying or refinancing a home, it’s a good time to lock a mortgage rate.
The FOMC’s next meeting will be its first scheduled meeting of the new year. The meeting is slated for January 24-25, 2012.