Federal Reserve, FOMC, Mortgage Rates

Fed Meeting Minutes Reveal Rising Wealth For Homeowners

April 11, 2013 by · Leave a Comment 

Federal Open Market Committee Minutes Released 4-10-2013The minutes for the Federal Open Market Committee (FOMC) meeting held March 19 and 20 were released yesterday Wednesday April 10, 2013.

These periodic meetings by the FOMC cover a wide range of topics that impact the overall economy in the United States.

The decisions made and acted upon by the FOMC often sway the real estate and residential financing markets.

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Some highlights from the March FOMC minutes include:

Jobs and Unemployment Gaining Steam

The unemployment rate fell to 7.7 percent in February.

While lower than the average unemployment rate for Q4 2012, the rates of long-term unemployment and part-time employment for economic reasons saw little change, and both measures remained high. This suggests that the economy is improving in some areas, while others including employment are not so quick to recover.

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Housing Markets Looking Robust

U.S. housing markets continued to improve during the inter meeting period, but construction of new housing faced obstacles including tighter credit and in some areas a lack of available building space.

While housing prices are improving, employment rates and wages will also need to expand for consumers to keep pace with rising home prices.

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Some of the Fed Meeting participants continued to be very positive about the prospects of the real estate sector noting rising home prices and demand.

At the same time, an overall tone of restraint and caution was expressed regarding the continuing purchase of Mortgage Backed Securities (MBS).

Any slowing in the Fed’s commitment to their previous levels of MBS purchases may create upward pressure on Northwest Indiana home mortgage interest rates.

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Personal Finances and Consumer Confidence

Household expenditures rose modestly during January and retail sales, excluding auto sector, increased at a strong pace in February. Sales of light autos also rose.

Household wealth also increased for homeowners due to increases in home values, which is good news for current homeowners and may be an incentive for new home buyers to move forward and purchase real estate.

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Recovering Economy Leads Toward Government Spending Pull Back

The FOMC minutes suggest that the Fed is not likely to end its quantitative easing (QE) program immediately, but the first quarter of 2014 was cited as a potential date for the program to end.

Gradual decreases in the Fed’s purchases of bonds and mortgage-backed securities are expected before QE ends, and this could cause Northwest Indiana mortgage rates to rise as MBS prices fall.

This most recent assessment is in line with financial analysts expectations since the beginning of this year that Northwest Indiana mortgage rates will definitely start it’s upward climb as the 2013 progresses.

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James K Barath, CMPS®

James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, Certified Military Housing Specialist® and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval !  His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!

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