Sharing some of the information I received at the Five Star Conference, Including some Exciting information on Short Sale's
Tuesday, September 22, 2009
The Federal Open Market Committee starts a 2-day meeting today in Washington.
The scheduled get-together ends at 2:15 PM ET Wednesday after which the FOMC will issue a press release to the markets.
Consider locking your mortgage in advance of the press release.
The FOMC meets 8 times annually and its adjournments are among the biggest market-movers of the year.
The Fed's post-meeting press release is a direct look into the mind of the Federal Reserve and Wall Street is looking for clues anywhere it can find them.
After its August 2009 meeting, the FOMC said in its press release:
- Financial markets have improved, relative
- Household spending remains constrained
- Although weak, the economy is "leveling off"
Since then, however, credit risks have lessened on Wall Street, consumer spending have shown signs of life and Fed Chairman Ben Bernanke said the recession is "very likely over".
This is why tomorrow's FOMC press release is so important. Markets don't expect the Fed to raise or lower the Fed Funds Rate, but they do expect the Fed to shed light on its next series of moves.
If the Fed alludes to inflation and stronger growth ahead, mortgage rates should rise. By contrast, reference to slower growth ahead should help keep rates steady.
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 the its does.
If you're floating a mortgage rate or wondering if the time is right to lock, the safe approach is to lock prior to 2:15 PM ET Wednesday.
Saturday, September 19, 2009
On the 1-year anniversary of the Lehman Brothers collapse, Fed Chairman Ben Bernanke said Tuesday that the "recession is very likely over at this point".
His comments were supported by a Retail Sales report for August that was much better-than-expected.
Equities improved on the day, mortgage markets worsened, and home affordability suffered.
The days of ultra-low mortgage rates may be coming to an end.
Since last September, mortgage bonds markets have been in Rally Mode. As the Financial Crisis of 2008 worsened, investors fled the relatively risky world of stocks and moved dollars into safer investments like cash and bonds -- including the mortgage-backed kind.
Risk aversion is common when market uncertainty exists but last year's aversion was so strong that, by late-November, it had forced mortgage rates down to an all-time low.
Since November, however, rates have been on the rise. Stronger economic data and a general feeling of optimism have helped stock markets recover and some of those gains are coming at the expense of low mortgage rates.
Therefore, if you're wondering what mortgage rates might do going forward, listen to the words of the Federal Reserve Chairman. If he sees economic recovery ahead, it's probably going to happen.
It should spell higher mortgage rates into 2010.