The Federal Open Market Committee (FOMC) concluded its two day meeting today with a 9-1 vote to leave the Fed Funds Rate (the rate at which lending institutions lend to each other) unchanged within its current target range of 0.00%-0.25%.

Some Key Points From the FOMC Press Release:

• “Economic growth strengthened somewhat in the third quarter, reflecting in part a reversal of the temporary factors that had weighed on growth earlier in the year.”
• “Investment in nonresidential structures is still weak.” This is referring to commercial real estate. 
• The Housing sector remains “depressed”.

The Role of the FOMC

The FOMC or FED is responsible for setting monetary policy in the United States. Its actions can exert incredible force on the bond and equities markets as well as mortgage rates. Since the FED sets monetary policy and participates in other activities such as buying Treasury debt, their activities can significantly impact the mortgage rates and the economy as a whole.

As the FED has implemented various policies to help push the economy out of recession, maintaining these policies for an extended period of time can do more damage than good.

From the FOMC Press Release: 

Information received since the Federal Open Market Committee met in September indicates that economic growth strengthened somewhat in the third quarter, reflecting in part a reversal of the temporary factors that had weighed on growth earlier in the year. Nonetheless, recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated. Household spending has increased at a somewhat faster pace in recent months. Business investment in equipment and software has continued to expand, but investment in nonresidential structures is still weak, and the housing sector remains depressed. Inflation appears to have moderated since earlier in the year as prices of energy and some commodities have declined from their peaks. Longer-term inflation expectations have remained stable.

Mortgage Rates Moving Forward

Renewed worries over a resolution in the Eurozone debt default crisis have helped keep rates from rising. This concern along with general concerns over the health of the United States economy have help keep rates at near all time historic lows. Since rates will move up quickly when they move up, locking in your rate may be a good idea. Not sure if you should lock or what type of loan is best for your scenario? We can help answer those questions and more and custom taylor a strategy based on your needs.