DEL MAR – October 24 2012: Goooodd Monday morning Saannnn Diiieggoooo!!! A big week in mortgage and real estate happenings has taken place since I last wrote you. Chairman of the Federal Reserve Ben Bernanke made a speech on Wednesday of last week that was expected to move rates downward in a big way, according to some forecasters. While rates did improve slightly, the impact was hardly earth-shaking.
In other news of the day, the Federal Open Market Committee(FOMC) voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250%, with Fed. Bernanke repeating his August 2011 performance where he gave an approximate 2 year forecast of assured low rates, this time into 2015. The vote was nearly unanimous for the ninth consecutive meeting, with Richmond Federal Reserve President Jeffrey Lacker the lone dissenter in another 9-1 vote. The Fed Funds Rate has hovered near zero percent since December of 2008.
The Federal Reserve noted that since its last meeting six weeks ago the U.S. economy has been “expanding at a moderate pace,” led by growth in household spending. The Fed. Went on to disclaim that “strains in global financial markets” continue to loom as a threat to our economy here stateside, as I’ve written about in great detail in past columns(Greece, Italy, the EU, yikes!).
Amidst citing slower than preferable job growth in the private sector, with unemployment again rising, the Fed threw a little sunshine of Housing, noting that there have been “further signs” of improvement, albiet “from a depressed level.”
A large part of Bernanke’s speech and the FOMC press release was spent affirming commitment to the most recent stimulus program, a bond-buying program known as QE3. Through QE3, the Federal Reserve has been purchasing $40 billion in mortgage-backed bonds monthly, a measure that has drawn criticism from opponents who point out that there is no defined “end date” to the program. QE3 was designed to suppress U.S. mortgage rates, and like any action via the Fed., implied or otherwise, a large segment of folks will always find it government meddling and intrusion in the marketplace. But the proof is in the pudding. QE3 has kept mortgage rates at all-time lows, and has therefore helped to stimulate mortgage movement, in the purchase market, and especially refinances.
If you have any questions about rates, qualifying, or are looking to sell or buy property, feel free to call me, Jason Bernabei, CEO of TriCastle Realty, and I’m happy to help put you on the right path. In the interim, I promise to keep reading and researching up on all this stuff in hopes of communicating to you, my audience, dense and stuffy information in an easy to understand way.
Jay’s Outlook: partly sunny
