Feds hold — Mortgage News

“The Fed has run out of bullets”, says Ted Peters, chairman and CEO of Bluestone Financial Institutions Fund, and a former member of the Philadelphia Federal Reserve Board.

The Federal Reserve hasn’t raised interest rates since 2006 and rate shave stayed near zero since December 2008. For context, that was before the advent of true smart phones and before the existence of Twitter.

Therefore, fluctuations in interest rates can hugely affect our personal finances. Voting against the action was Jeffrey Lacker, who preferred to raise the target range for the federal funds rate by 25 basis points at this meeting. But a decline in fixed rates might be in the offing. “We better get that house before they go up too high, ‘” he said.

The Mortgage Bankers Association reports a 7 percent drop in loan application volume from the previous week. And in contrast to two years ago, when mortgage rates spiked in response to the Taper Talk, the economy is in much better shape and markets have been expecting the Fed to act for months.

But if rates keep rising, so will the consequences. “The Fed under Janet Yellen has been terribly dovish and they tend to err on the side of caution”.

Current mortgage rates for this Wednesday are mostly stable with very little movement seen at the top banks.

However, given the “immense political pressure” around the issue of stagnant wages and income inequality, he adds, it’s highly unlikely policymakers will allow any significant increase in rates and borrowing costs over the coming months. This is particularly true, he adds, for variable-rate debts, such as adjustable-rate mortgages, which tend to be attractive to less-affluent borrowers because of lower initial payments.

The 15-year fixed-rate average crept up to 3.11 percent with an average 0.6 point.

QuoteAttributed to Sean Becketti, chief economist, Freddie Mac.

“Prior commentaries about low inflation being transitory were apparently not a motivation for today’s inaction”. “Nonetheless, the confidence of the financial markets if the Fed is doing the right thing does have an impact”. “Indeed, the uncertainty over rate hikes is probably the major cause of the volatility”.

“In aggregate I think the near-term impact is negligible if not positive”.

He said in some cases, customers could get rates that were cheaper than the six-month rate for longer terms.

Why is the Fed considering a move now?

A new survey conducted this week by Trulia suggests that homebuyers aren’t concerned about a rise in rates. The mortgages in this week’s survey had an average total of 0.23 discount and origination points.

For years, savers have complained about microscopic CD rates.

“They’re anxious about whether they’ll continue their lifestyle, whether they’ll be able to leave anything – inheritance – to their kids”, she says. There is no debate rates will need to increase in the future.