Quick Search

« Back    « Articles Main Menu

REAL ESTATE & MORTGAGE NEWSLETTER

May 2015

 

What's Inside?

Rate Predictions

Home Sales Figures

Home Appreciation

Inventory Levels

Movies

 

 

Home Sales Pace
Home Appreciation
Interest Rate Outlook & History

Federal Reserve Caution May Stave Off Mortgage Rate Hike

With the release of the minutes from the April Federal Reserve meeting, the mortgage industry breathed a sigh of relief anticipating another few months of low interest rates.

The Fed’s Federal Open Market Committee met between April 28 and 29 and decided to keep it target interest rate at the rock bottom range of 0 to 0.25 percent for the following six week. The recent release of the minutes from that meeting shed light on why the Fed refrained from action and how long it may wait before raising rates.

The data the Committee reviewed “indicated that real gross domestic product (GDP) only edged up in the first quarter, with growth likely held down, in part, by transitory factors.” the minutes stated. “The pace of improvement in labor market conditions moderated somewhat, and the unemployment rate was unchanged over the intermeeting period. Consumer price inflation continued to run below the FOMC’s longer-run objective of 2 percent.”

Those sentiments translate in one basic fact: the economy slowed down in the first quarter.  The slow progress of GDP, unemployment, job creation and inflation made the Fed unsure that there would even be a need to raise interest rates by its next meeting on June 16 and 17.

Committee members “thought it unlikely that the data available in June would provide sufficient confirmation that the conditions for raising the target range for the federal funds rate had been satisfied, although they generally did not rule out this possibility,” the minutes said.

With no likely movement of the target rate until September, there may be little pressure on mortgage rates to rise through that period as well. As the housing market still fights its way back through recovery, historically low rates are helpful in luring borrowers into the market.

The Fed dropped its target rate in 2008 in an attempt to bolster the flailing housing industry and mortgage rates sand to record lows and remained there for more than four years. Then in 2013, the Fed made remarks about its intention to taper it market stimulus bond-buying program and the mortgage markets responded with an enormous jump in rates overnight. The result was a major slowdown in home buying and refinance, a significant blow to a healing housing market.

While rates may be frozen for the next few months, the Fed does believe it will need to raise rates in the medium term.

“Although growth in output and employment slowed during the first quarter, the Committee continues to expect that, with appropriate policy accommodation, economic activity will expand at a moderate pace… Inflation is anticipated to remain near its recent low level in the near term, but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further.”

Still the bottom line is that the Fed will not raise rates until inflation near 2 percent, a measure that buys the mortgage industry another few months at least of low rates.


Leolinda Bowers
Ken Meade Realty

 

Equal Housing Opportunity

Phone: 623-937-5701

Mobile: 602-403-6865

Home Page:  www.leolinda.com



Admin. Login

Copyright © 2007 Leolinda Bowers™. All Rights Reserved.
Leolinda Bowers
Long Realty West Valley
Ph: (623) 937-5701Fax:(623) 321-1117
Surprise, AZ 85374 US
www.leolinda.com
About Leolinda™ Contact Leolinda Local Weather Link to Leolinda Phoenix Arizona Golf Retirement Communities Arizona Traditions Search Arizona Traditions Homes for Sale on MLS Arizona Traditions Just Listed Floor Plans - Arizona Traditions SOLD! Arizona Traditions Real Estate Sales Corte Bella Country Club Search Corte Bella Country Club Homes for Sale on MLS Corte Bella Just Listed Floor Plans - Corte Bella SOLD! Corte Bella Country Club Sun City West Pebble Creek Goodyear Arizona Search Pebble Creek Real Estate Homes for Sale PebbleCreek Just Listed Floor Plans - Pebble Creek SOLD! PebbleCreek Goodyear Arizona Sun City Festival Buckeye Arizona Search Sun City Festival Homes for Sale on MLS Sun City Festival Just Listed Floor Plans - Sun City Festival SOLD! Sun City Festival Buckeye AZ Home Sales Sun City Grand by Del Webb in Surprise Arizona Search Sun City Grand Homes for Sale on MLS Sun City Grand Just Listed Sun City Grand Floor Plans SOLD! Sun City Grand Surprise AZ Real Estate Home Sales Sun City West Search Sun City West Real Estate Homes for Sale Sun City West Just Listed Sun City West Floor Plans SOLD! Sun City West AZ Real Estate Sales Trilogy at Vistancia Search Trilogy at Vistancia Homes for Sale Trilogy at Vistancia Just Listed Trilogy at Vistancia Floor Plans SOLD! Trilogy at Vistancia Homes Sold Leolinda's Listings My SOLD Listings Golf Communities in Arizona Blogs Relocation YouTube Testimonials My Virtual Tours Real Estate News Area & Business Links Driving Times Around Arizona Arizona Business Links Local Schools Selecting a Realtor Home Value Request Sell Your House Buyer Reports Seller Reports Site Map Calculators Rental Home Finder My Blog
Leolinda ® and Leolinda Bowers ® are registered in the US Patent and Trademark Office. Text, Images, Photography - Copyright © 2005-2015 Leolinda Bowers. All rights reserved. The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of Leolinda Bowers. Links to relevant information on the website are welcome.

Visit the Google+ personal and page of Leolinda Bowers.