FOMC Minutes

Fed Meeting Minutes Show Hope In Economic Growth

November 21, 2013 by · Leave a Comment 

Fed Meeting Minutes Show Hope In Economic GrowthThe minutes of the Federal Reserve’s Federal Open Market Committee meeting held October 29 and 30 were released Wednesday. The meeting began with a report from the Manager of the System Open Market Account and included updates on developments within domestic and foreign financial markets.

According to the report, no intervention by the Federal Reserve was required on foreign currencies during the period between the last and current FOMC meetings.

FOMC: Key Data Delayed by Shutdown

The FOMC noted moderate economic growth in the period since its last meeting, but also noted that several federal agencies delayed release of key statistics due to the government shutdown in early October. The FOMC minutes included updates on several economic sectors including:

Labor: Private non-farm payrolls for September increased at a slower rate than for August and the unemployment rate remains high at 7.20 percent. The FOMC has set a target unemployment rate of 6.50 percent as a benchmark for considering changes to the Fed’s quantitative easing program, which supports lower long-term interest rates and mortgage rates.

A high rate of part-time employment and a slight drop in full-time employment may indicate why would-be home buyers remain on the sidelines. FOMC members noted that while weekly unemployment claims rose during some weeks in October, this was likely fall-out related to the government shutdown.

Manufacturing: Production rose slightly, but was flat other than for motor vehicles. The committee expected to see gains in production in the near term.

Personal Consumption Expenditures: This sector rose in August and retail sales excluding autos were significantly higher in September. Factors impacting consumer spending were mixed. Homeowners enjoyed increasing home prices and home equity, but overall consumer sentiment declined even as disposable income increased in August.

Housing: The committee said that little current data was available for the housing sector due to the shutdown. Building permits and housing starts for single family homes rose in August. After a significant drop in July, sales of new homes rose in August while sales of existing homes fell. Pending home sales also fell during August and September.

Quantitative Easing: FOMC members decided not to alter its current QE program during its September meeting; this caused investors and analysts to revise their expectations for the Fed taking action to reduce its current pace of $85 billion in monthly bond purchases.

Expectations for the total amount of asset purchases under QE were revised upwardly, which suggested that no major changes in current Fed monetary policy is anticipated.

Overall, the minutes of October’s FOMC meeting echoed the committee’s recent perception of moderate economic growth as expressed during its 2013 meetings, and its intention to maintain asset purchases and the target federal funds rate at current levels in the coming months.

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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FOMC Minutes

Fed Meeting Minutes Signal Mortgage Rates To Remain Low

September 19, 2013 by · Leave a Comment 

Fed Meeting Minutes Expose Mortgage Rates As Remaining Historically LowThe Federal Open Market Committee of the Federal Reserve decided not to reduce the Fed’s current quantitative easing program of purchasing $85 billion monthly in Treasury securities and mortgage-backed securities.

Going against wide expectations that the Fed would reduce the QE purchases, Fed Chairman Ben Bernanke said that current economic conditions aren’t strong enough to warrant tapering right now.

The Federal Reserve May Reduce Monthly Purchases

The FOMC, which sets monetary policy for the Federal Reserve has hinted that it might soon reduce the monthly securities purchases, but has also stated that it would closely review emerging economic news and conditions as part of any decision to reduce the securities purchases under QE.

Chairman Bernanke clearly indicated that the decision to reduce asset purchases would be “deliberate and dependent” on economic developments. He underscored this point by saying that benchmarks for tapering QE purchases “are not triggers, but targets” and that no automatic tapering of QE purchases would be made only because an economic benchmark had been met.

The two benchmarks associated with QE are a national unemployment rate of 6.50 and a target inflation rate of 2.00 percent. The Fed expects that inflation will gradually increase, but is likely to remain below 2.00 percent through 2016.

The Fed chairman noted that the unemployment rate has decreased from 8.10 percent to 7.30 percent year-over-year, he said that the jobless rate remains “unacceptable.” The current QE program, which involves the monthly securities purchases and keeping the target federal funds rate at between 0.00 and 0.25 percent was implemented a year ago.

Chairman Bernanke repeated the FOMC position that the federal funds rate would be kept at the current target rate as “no meaningful change can be made.” It’s likely that the federal funds rate will remain at its lowest target level through 2015.

Fed Expects Moderate Economic Improvement

Chairman Bernanke remarked that tight credit policy could be hampering economic recovery and that the FOMC expected a gradual reduction in “financial headwinds” affecting the economy.

After making the post-meeting statement for FOMC, Mr. Bernanke conducted a press conference.

His responses to media questions strongly emphasized the Fed’s intention to maintain open communications with the media. The chairman seemed concerned that the Fed’s prior statements about possible changes to QE had been misunderstood.

The Fed’s decision to maintain QE asset purchases at current levels are expected to help keep mortgage rates low. Although mortgage rates have been rising since May, they remain historically low.

News for housing starts and building permits issued for August support the Fed’s position that economic recovery is lagging behind expectations. Housing Starts came in at 891,000 as compared to expected starts of 921,000, but were higher than July’s reading of 883,000 housing starts.

Building permits for August also fell shy of expectations; 918,000 permits were issued and fell short of the 955,000 expected building permits. 954,000 building permits were issued in July.

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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FOMC Minutes

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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FOMC Minutes

What The Fed Sees Ahead for Housing, Inflation & Rates

April 7, 2010 by · Leave a Comment 

Mortgage markets improved yesterday in Northwest Indiana after the Federal Reserve released its March 16, 2010 meeting minutes. It’s good news for home buyers and rate shoppers — rates could have just as easily gone the other way.

The Fed Minutes is a detailed recap of the debate and discussion that shapes the nation’s monetary policy. The notes are dense; it takes 3 weeks to compile them for publication.

As compared to the more well-known, post-meeting press release, the Fed Minutes are extremely lengthy. For example:

If the press release is the executive summary, the Fed Minutes are the novel.

The extra words matter. The minutes recount what the Fed did, how the Fed did it, and what the Fed plans to do next. And, in the minutes, Wall Street looks for clues. 

This is why the report is important to every home loan shopper in Chesterton, Crown Point, Dyer, Highland, Munster, Portage, Schererville and Valparaiso.

When the Federal Reserve publishes the minutes from its meetings, it leaves clues about the groups next policy-making steps.  For example, in March’s Fed Minutes, it’s clear that the Fed’s concern about inflation is hugely diminished and that’s a major plus for the mortgage bond market.

Inflation causes mortgage rates to rise. The absence of inflation, therefore, helps them to fall.  This improves home affordability, among other things.

Similarly, the Fed Minutes note that real estate sales may have been worse throughout the winter months if not for low mortgage rates and the sense among Americans that home prices were troughing. We may infer, therefore, that rising rates may suppress home sales later this year.

Markets are always looking for clues from inside the Fed and the last meeting’s minute signal that the economy is on its way up.  If you’re looking for a bargain in the Northwest Indiana housing market, your window to act may be closing.

Contact James K Barath in Northwest Indiana to Qualify for Your FREE FHA Home Loan Approval Today!

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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FOMC Minutes

What the FED Said that Increased Mortgage Rates

February 18, 2010 by · Leave a Comment 

Mortgage markets reeled Wednesday after the Federal Reserve released the minutes from its January 26-27, 2010 meeting. Mortgage rates in Northwest Indiana are now at their highest levels since the start of the year.

The Fed Minutes is a follow-up document, delivered 3 weeks after an official FOMC meeting. It’s a companion piece to the post-meeting press release, detailing the debates and discussions that shaped our central bankers’ policy decisions.

The Minutes is a terrific look into the Fed’s collective mind and, yesterday, Wall Street didn’t like what it saw.  Specifically, the report disclosed that:

  1. The Fed plans to break support for mortgage markets after March 31, 2010
  2. Raising the Fed Funds Rate will be a key part of the Fed’s strategy to tighten monetary policy
  3. The fundamentals behind consumer spending strengthened modestly

Furthermore, the Fed Minutes said that there is a growing risk of “higher medium-term inflation”. Inflation, of course, is awful for mortgage rates.

Overall, the Fed’s economic optimism appeared stronger after its January meeting as compared to its December one.  A stronger economy should lead to better job growth and higher home prices throughout 2010.

Mortgage rates were up yesterday but they remain historically low. And many analysts think that after March 31, 2010, rates will rise even more.  Therefore, if you’re buying a home in the near-term, or know you’ll need a new mortgage, consider moving up your time frame. 

Every 1/8 percent makes a difference in your household budget.

Contact James K Barath in Northwest Indiana to Qualify for Your FREE FHA Home Loan Approval Today!

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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FOMC Minutes

Surprise! Federal Reserve Is Uncertain About The Economy

January 7, 2010 by · Leave a Comment 

Both mortgage rates and home affordability took a turn for the better Wednesday after the Federal Reserve released its December 15-16, 2009 meeting minutes.

The Fed Minutes is a follow-up piece to the post-FOMC meeting press release. But whereas the press release is succinct and to-the-point, the minutes are lengthy and often meandering.

As a comparison, December’s press release contained 535 words. December’s minutes had 6,260

But these “extra words” aren’t superfluous. They’re actually very important to homeowners. Because the Federal Reserve’s internal debates help to shape Wall Street expectations, it doesn’t take much for those conversations to have a trickle-down effect on Main Street.

For example, after the December meeting, the Fed said that economic growth is steady, inflation is in check, and an orderly wind-down of mortgage market support was underway. A look at the minutes, though, showed some disconnect.

Some Fed members believe rising commodity prices could lead to stronger-than-expected, and others think that improvement is housing could be “undercut” by a pull-back in government stimulus.

Overall, the Fed appears optimistic about the economy, but not as optimistic as on December 16. Mortgage markets responded favorably to the minutes and mortgage pricing improved.

Although rates remain higher as compared to early-December, pricing has been on a good run this week. If you’re under contract for a home or just looking to refinance, now may be a good time to lock.

Need more expert advice? Ask the team of Certified Mortgage Planning Specialists at Benchmark Mortgage.

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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FOMC Minutes

Why Mortgage Rates Are Back to All-Time Lows

November 27, 2009 by · Leave a Comment 

Home affordability improved this week after the Federal Reserve released its November 3-4, 2009 meeting minutes.

The FOMC Minutes is a companion to the Federal Reserve’s post-meeting press release. It’s released 3 weeks after the Fed adjourns and details the internal debates that shape our nation’s monetary policy. 

As compared to the press release, the minutes can be rather lengthy. November’s press release featured 428 words, the minutes offered 6531.

However, this extra level of detail shapes markets and mortgage rates.  With Wall Street unsure about the economy’s path, investors look to our nation’s central bankers for guidance.

The Fed has made several points clear:

  1. The economy shows tell-tale signs of improvement
  2. Unemployment threatens the recovery
  3. Inflation pressures are low, for now

Overall, the FOMC Minutes paint the economy as in a state of measured repair, and under tight federal surveillance.  Investors like this message and, as a result, stock and bonds markets are improving.

If you haven’t checked mortgage rates lately, make a point to do that.  In the wake of the FOMC Minutes, conforming mortgage rates are now hovering near their all-time lows set exactly 1 year ago.

Need more expert advice? Ask the team of Certified Mortgage Planning Specialists at Benchmark Mortgage.

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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FOMC Minutes

The Fed Thinks The Economy Is Improving And What It Means For Home Affordability

October 16, 2009 by · Leave a Comment 

Mortgage rates are higher after the Federal Reserve released the internal notes of its September 22-23, 2009 meeting.

Known as the “Fed Minutes”, the report details the conversation and cross-currents that led to the Federal Reserve’s decision to vote “unchanged” on the Fed Funds Rate after its last meeting.

The Fed Minutes are the lengthy companion to the more famous, succinct post-meeting press release.

As a comparison:

The extra level of details is a big deal because Wall Street is perpetually in search of clues about what the Federal Reserve is going to do next.

In the past week, multiple Federal Reserve members hinted that the Fed Funds Rate may rise as early as April 2010.  Fed Chairman Ben Bernanke even alluded to it, too.

The minutes revealed that the economy may improve even faster than was previously expected, too.

These acknowledgements are part of the reason why mortgage rates are up. Because the Fed Funds Rate rises to accommodate a growing economy, the prospect of economic recovery is drawing money into the stock market and away from mortgage-backed bonds.

Less demand for bonds means a lower prices which, in turn, leads to higher rates.

Need more expert advice? Ask the team of Certified Mortgage Planning Specialists at Benchmark Mortgage.

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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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