The Fed’s Official Statement And What It Means To The Mortgage Market (December 14 2010)

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Today, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged within in its target range of 0.000-0.250 percent.

Economic Growth Continuing

In its press release, the FOMC noted that since November's meeting, the "economic recovery is continuing", but at a pace deemed too slow to make a material impact on unemployment rates. It also said that household spending in increasing, but remains constrained by joblessness, tight credit and lower housing wealth.

In addition, the Fed used its press release to re-affirm its plan to keep the Fed Funds Rate near zero percent "for an extended period" while also opting to keep its $600 billion bond market support package in place.

Fed Says: We Need More Inflation

Lastly, of particular interest to home buyers and mortgage rate shoppers, the FOMC statement devoted an entire paragraph to the Federal Reserve's dual mandate of keeping inflation and employment at acceptable levels.

The Fed acknowledges making progress toward this goal, but calls it "disappointingly slow". Currently, inflation is too low for what the Fed deems acceptable, and unemployment is too high. Over time, the Fed expects both measurements to improve which should lead to much higher mortgage rates in Cincinnati.

Mortgage market reaction to the FOMC statement has been negative thus far. Pricing is poised to worsen.

Very Last Chance To Refinance?

Since the Fed's last meeting in November, mortgage rates are up 0.75% and will likely rise in the months ahead. Regardless of how long you've owned your home, you may be eligible for a refinance.

Talk to your loan officer about a rate quote, orwith some bullet points on your situation. I'll get your pricing right away.

(Post adapted from Bring the Blog)