The FOMC (Federal Open Market Committee) or sometimes referred to as the “Fed”, concluded its two day meeting today.
In a press release, the FOMC announced it’s thoughts on the state of the economy today and moving forward in addition to its plans for future monetary policy. The equities and bond markets pay close attention to the statements that come out of FOMC meetings as monetary policy as set by the FOMC can significantly impact our economy and the economies around the world.
The FOMC: Extends Exceptionally Low Levels for the Federal Funds Rate at Least Through Late 2014
The FOMC made several statements that have sent mortgage rates back to all time historical lows.
- The committee extended its “forward guidance” on interest rates stating that “economic conditions” are likely to “warrant exceptionally low levels for the federal funds rate at least through late 2014”.
- Current economic conditions: Described as “expanding moderately”. This means that conditions are essentially unchanged, the key point being that they have not worsened, which is good.
- The committee “expects to maintain a highly accommodate stance for monetary policy.” This tells the markets that they’re still willing and able to take measures in the future, especially in relation to inflation, which is good. This is as opposed to stepping aside and letting the market play out, which can be bad if the market can in fact, improve with some monetary intervention.
From the FOMC Press Release:
To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.
How The Fed’s Statements Affect You and Your Mortgage
Immediately after hearing the FOMC’s statement, mortgage rates fell back down to the all time historical lows they were at last week. This latest development is only the latest in a series of events over the past few months where mortgage rates have been at all time historical lows or set new lows. The unprecedented window is a very unique opportunity to get into a mortgage at the lowest rates we have seen in our lifetime.
We can help you understand how much you qualify for if you are purchasing a new home and help you understand what mortgage best fits your needs. We only need a few minutes with no obligation to put together a strategy that best fits your financial needs and goals for your home purchase or refinance of your existing loan.