FOMC,Mortgage Rates,Ben Bernanke
Making A Mortgage Rate Strategy Ahead Of The Fed’s Meeting This Week
The Federal Open Market Committee begins a 2-day meeting today, its fourth scheduled meeting of the year, and fifth overall.
The FOMC is the monetary policy-setting part of the government and its primary tool for that purpose is the Fed Funds Rate.
The Fed Funds Rate is the dictated rate at which banks borrow money from each other and, since December 16, 2008, the Federal Reserve has voted to keep the benchmark rate within a target range of 0.000-0.250 percent.
This is the lowest Fed Funds Rate in history. A rate near zero-point-zero percent renders borrowing by business and consumers cheap which, in turn, promotes investment and growth.
There’s no expectation for the Fed to change the Fed Funds Rate after it adjourns tomorrow, but that doesn’t mean consumers in Logan Square should expect mortgage rates to remain unchanged, too.
To the contrary, mortgage rates tend to be volatile when the FOMC is meeting. This is because the FOMC issues a press release after each meeting and in that press release, it comments on the economy’s unique threats, strengths and weaknesses.
When the FOMC speaks, Wall Street listens.
The words of the Chairman Ben Bernanke’s press release will be dissected and analyzed. A single mention of higher-than-expected inflation levels, or better-than-expected growth, and traders will rush to dump their bond positions in favor of equities.
This has a negative effect on mortgage rates.
Conversely, if the Fed is dour on the economy, mortgage rates may fall.
We can’t know for sure what the Fed will say or do tomorrow afternoon so if you’re floating a mortgage rate and wondering whether to lock, the safe choice is to lock prior to 2:15 PM ET Wednesday.
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Brian Guzman
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Chicago, IL 600657
Brian Guzman celebrated the start of his 3rd year as a real estate consultant by joining @properties in the Spring of 2007. He holds previous experience with two real estate firms in the River North and Lincoln Park neighborhoods. He was a highly valuable member on a team that produced over $100 million in sales in 2006. Brian strives for unmatched service and complete satisfaction in every transaction that comes his way. Whether you are a buyer or seller, he has the knowledge, experience, and determination to surpass your expectations. Brian is loaded with the latest marketing materials, strategies, methods, and company support that will fulfill your real estate needs and goals. He believes there is no limit to the amount of service and representation he can provide.
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