What's Ahead For Mortgage Rates This Week : December 19, 2011

Mortgage markets improved last week, but by a slight amount only; not enough to move conventional mortgage rates in california in any significant manner.

Wall Street watched as Eurozone leaders expressed little willingness to increase aid programs within the region, and as the Federal Reserve voted against new economic stimulus for the United States. The Fed Funds Rate remains near 0.000 percent and QE3 was not introduced.

Investors had expected the opposite outcome in both scenarios.

In most weeks, these stories would have led mortgage rates lower. There was, however, a fair amount of data suggesting that the U.S. economy is in recovery, and that tempered any major shifts in markets.

• Manufacturing data proved to be strong
• Inflation numbers are heating up
• Jobless claims continue to drop, week-to-week

In addition, in its last meeting of the year, the Federal Reserve specifically mentioned that the economy has been "expanding moderately".

These are all good signs for the future of the U.S. economy. Unfortunately, for mortgage rate shoppers and would-be home buyers, it may mean higher mortgage rates ahead.

Since early-November, mortgage rates have idled, moving within a range of less than 2 basis points and centered on 3.99%. According to Freddie Mac, this week's average 30-year fixed rate mortgage fell to 3.94% which, at first glance, appears to be a "dip".

To get access to that rate, however, requires more discount points as compared to prior weeks.

This week's 3.94% with its accompanying 0.8 discount points is the financial equivalent of last week's 3.99% with its accompanying 0.7 discount points. Going further, last week's rates are actually less expensive to mortgage applicants for the first 3 years of a loan because the closing costs are so much lower.

So, given global economic conditions and the mortgage bond market's status as a "safe market", the failure of mortgage rates to fall suggests that this may be as low as mortgage rates get. It's time to look at locking in.

This week is a holiday-shortened week. Markets will close early-Friday and volume is expected to be thin. Therefore, expect exaggerated movements in rates. There are 3 releases related to housing (Housing Starts, Existing Home Sales, New Home Sales) and a consumer sentiment release. 

A Simple Explanation Of The Federal Reserve Statement (December 13, 2011 Edition)

Tuesday, the Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.

The vote was nearly unanimous for the second straight month. Just one FOMC member dissented in the vote, favoring additional policy stimulus beyond what the Federal Reserve currently provides.

In its press release, the Federal Reserve sais that the the U.S. economy is improving, noting that since its November 2011 meeting, the economy has been "expanding moderately". The Fed also added that domestic growth is occurring despite some "apparent slowing in global growth" -- a nod to ongoing uncertainty within the Eurozone.

The Federal Reserve expects a moderate pace of growth over the next few quarters, and believes that the jobs market will continue to improve, but slowly.

Other potential soft spots within the economy include :  

1. A slowdown in business investment
2. A "depressed" housing market
3. Strains in global financial markets

The Federal Reserve added no new policies at its December meeting, and made no changes to existing ones. It re-iterated its plan to leave the Fed Funds Rate within its current range of 0.000-0.250 percent "at least until mid-2013" and re-affirmed "Operation Twist" -- the stimulus program through which the Fed sells Treasury securities with a maturity of 3 years or less, and uses the proceeds to buy mortgage bonds with maturity between 6 and 30 years.

Mortgage bonds are mostly unchanged since the Fed's announcement, giving mortgage rates in Corona little reason to rise or fall.

Mortgage rates remain near all-time lows and, for homeowners willing to pay points + closing costs, 30-year fixed rate mortgages can be locked at less than 4 percent. If you're thinking of buying or refinancing a home, it's a good time to lock a mortgage rate.

The FOMC's next meeting will be its first scheduled meeting of the new year. The meeting is slated for January 24-25, 2012.

A Simple Explanation Of The Federal Reserve Statement (November 2, 2011 Edition)

Wednesday, the Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.

The vote was nearly unanimous, with just one dissenting voter. There were 3 dissenters at each of the FOMC's last two meetings.

In its press release, the Federal Reserve presented an improved outlook for the U.S. economy, noting that since its last meeting in September, there's new evidence that the economy "strengthened somewhat" in the third quarter.

One example cited is that consumer and business spending continues to rise while inflationary pressures on the economy remain modest. This indicates controlled growth -- a plus in a recovering economy.   

The economy remains slowed by a number of factors, though, as noted by the Fed :

1. "Continuing weakness" in the labor market
2. Softness in commercial real estate
3. A "depressed" housing market

In response to mixed economic conditions, the FOMC opted to "do nothing" today; it introduced no new monetary policy, and revised none of its existing market stimulus. The Fed re-iterated its plan to leave the Fed Funds Rate in its current range near 0.000 percent "at least until mid-2013″ and affirmed "Operation Twist" -- the program in which the Fed sells Treasury securities with a maturity of 3 years or less, and uses the proceeds to buy mortgage bonds with maturity between 6 and 30 years.

Mortgage market reaction to the FOMC statement has been negative this afternoon. Mortgage rates throughout california are rising because analysts expected the Fed to launch new, bigger stimulus plans. It didn't. Rates may drift higher for the new few days, too.

Therefore, it today's mortgage rates fit your household budget, consider locking in a mortgage rate. Mortgage rates are very low right now, relative to history. It may not last.

The FOMC's next meeting -- its last scheduled meeting of the year -- is December 13, 2011.

Make Your Mortgage Rate Strategy : The Federal Reserve Starts A 2-Day Meeting

The Federal Open Market Committee begins a scheduled, 2-day meeting today, the seventh of its 8 scheduled meetings this year, and the eighth Fed meeting overall.

The FOMC is a 12-person sub-committee within the Federal Reserve. It's the group responsible for setting the nation's monetary policy and is led by Federal Reserve Chairman Ben Bernanke.

The FOMC's most well-known role is as the steward of the Fed Funds Rate. This is the overnight rate at which U.S. banks borrow money from each other. The Fed Funds Rate is a unique, "banking" interest rate, and should not be confused with consumer interest rates, a category which includes "mortgage rates".

Mortgage rates are not set by the Federal Reserve. 

Rather, mortgage rates are based on the price of mortgage-backed bonds. If mortgage rates correlated to the FOMC's Fed Funds Rate, the chart at right would be linear.

That said, the FOMC does exert influence on mortgage markets.

After its FOMC meetings, the Federal Reserve issues a press release to the public. In it, the central banker summarizes economic conditions nationwide, highlighting threats to the economy and areas of strength.

When the Federal Reserve's statement is generally "positive", mortgage rates tend to rise. This is because a strengthening economy invites investors to assume more risk, spurring equity markets at the expense of all bonds types, including the mortgage-backed kind.

When bond markets lose, mortgage rates rise.

Conversely, when the Fed is generally negative, bond markets gain, pushing mortgage rates lower throughout california.

The Fed can also influence mortgage rates via new policy.

At its last meeting, the FOMC launched a new, $400-billion round of mortgage-market stimulus known as Operation Twist. The added mortgage-bond support led mortgage rates lower post-FOMC meeting. 

The Fed may expand Operation Twist as soon as Wednesday afternoon. It may also take no such steps at all. Unfortunately, there are few clues about what the Federal Reserve may do next, if anything at all. As a result, mortgage rates will be a moving target for the next 36 hours. First, they'll be volatile before of the Fed's statement. Then, they'll be volatile after the Fed's statement.

Even if the Fed does nothing, mortgage rates will change so your safest play is to lock a mortgage rate ahead of Wednesday's 2:15 PM ET adjournment.

There too much risk in floating.

A Simple Explanation Of The Federal Reserve Statement (September 21, 2011 Edition)

Wednesday, the Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.

The vote was 7-3 -- the second straight meeting at which the FOMC adjourned with as many 3 dissenters. Prior to that last meeting, there hadn't been 3 FOMC dissenters since 1992.

In its press release, the Federal Reserve presented a dour outlook for the U.S. economy, noting that since its last meeting in August:

1. Economic growth "remains slow"
2. Unemployment rates "remain elevated"
3. The housing sector "remains depressed"

The Fed also said that there are "significant downside risks" to the economic outlook, tied to strains in the global financial markets.  

The news wasn't all bad, however.

The Fed noted that business investment in equipment and software continues to expand, and that inflationary pressures on the economy appear to have stabilized. The Fed then re-iterated its plan to leave the Fed Funds Rate in its current range near 0.000 percent "at least until mid-2013". This means that Prime Rate -- the rate to which credit card rates and lines of credits are often tied -- should remain unchanged at 3.250 for at least another 2 years.

Furthermore, as expected, the Federal Reserve launched a market stimulus plan aimed at lowering long-term interest rates. The Fed will sell $400 billion in Treasury securities with a maturity of 3 years or less, and use the proceeds to buy the same with maturity between 6 and 30 years.

Mortgage market reaction to the FOMC statement has been positive this afternoon. Mortgage rates in california are improving, but note that Wall Street sentiment can shift quickly -- especially in a market that's as uncertain as this one.

If today's mortgage rates and payments fit your household budget, consider locking in a rate. Rates can change swiftly.

The FOMC's next meeting is a 2-day affair, scheduled for November 1-2, 2011.

A Simple Explanation Of The Federal Reserve Statement (September 21, 2011 Edition)

Wednesday, the Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.

The vote was 7-3 -- the second straight meeting at which the FOMC adjourned with as many 3 dissenters. Prior to that last meeting, there hadn't been 3 FOMC dissenters since 1992.

In its press release, the Federal Reserve presented a dour outlook for the U.S. economy, noting that since its last meeting in August:

1. Economic growth "remains slow"
2. Unemployment rates "remain elevated"
3. The housing sector "remains depressed"

The Fed also said that there are "significant downside risks" to the economic outlook, tied to strains in the global financial markets.  

The news wasn't all bad, however.

The Fed noted that business investment in equipment and software continues to expand, and that inflationary pressures on the economy appear to have stabilized. The Fed then re-iterated its plan to leave the Fed Funds Rate in its current range near 0.000 percent "at least until mid-2013". This means that Prime Rate -- the rate to which credit card rates and lines of credits are often tied -- should remain unchanged at 3.250 for at least another 2 years.

Furthermore, as expected, the Federal Reserve launched a market stimulus plan aimed at lowering long-term interest rates. The Fed will sell $400 billion in Treasury securities with a maturity of 3 years or less, and use the proceeds to buy the same with maturity between 6 and 30 years.

Mortgage market reaction to the FOMC statement has been positive this afternoon. Mortgage rates in california are improving, but note that Wall Street sentiment can shift quickly -- especially in a market that's as uncertain as this one.

If today's mortgage rates and payments fit your household budget, consider locking in a rate. Rates can change swiftly.

The FOMC's next meeting is a 2-day affair, scheduled for November 1-2, 2011.

The Fed Adjourns At 2:15 PM ET Today : What It Means For Mortgage Rates

The Federal Open Market Committee adjourns from a two-day, scheduled meeting today, the sixth of 8 scheduled meetings this year, and the seventh Fed meeting overall.

The FOMC is a designated, 12-person committee within the Federal Reserve, led by Fed Chairman Ben Bernanke. The FOMC is the voting members for the country's monetary policy. Among its other responsibilities, the FOMC sets the Fed Funds Rate, the overnight rate at which banks borrow money from each other.

Note that the "Fed Funds Rate" is different from "mortgage rates". Mortgage rates are not set by the Fed. Rather, they are based on the price of mortgage-backed bonds, a security traded among investors.

As the chart at top illustrates, the Fed Funds Rate and conforming mortgage rates in Riverside have little correlation. Since 1990, the two benchmark rates have been separated by as much as 5.29 percent, and have been as close as 0.52 percent.

Today, the separation between the Fed Funds Rate and the national average for a standard, 30-year fixed rate mortgage is roughly 4 percent. This spread will change, however, beginning 2:15 PM ET Wednesday. That's when the FOMC adjourns from its meeting and releases its public statement to the markets.

There is no doubt that the Fed will leave the Fed Funds Rate in its current target range of 0.000-0.250%; Fed Chairman Bernanke plans to leave the benchmark rate as-is until at least mid-2013. However, the Fed is expected to add new support for markets.

Unfortunately, there are few clues about how the Fed will support markets, and there is no consensus opinion regarding the size of the said support. As a result, mortgage rates should be bouncy today. First, they'll be volatile ahead of the Fed's statement. Then, they'll be volatile post-Fed statement.

Even if the Fed does nothing, mortgage rates will change. This is because Wall Street is prepping for an announcement and -- no matter what the Fed says or does -- investors will want to react accordingly.

When mortgage markets are volatile, the safest move is to lock your mortgage rate in. There too much risk to float.

Capitalize On Low Interest Rates In Overlooked Places

It's no secret. Rates are low right now. And, it's not just mortgage rates, either -- all types of rates are scraping rock-bottom. Borrowing rates, lending rates and savings rates are at or near their all-time lowest levels.

As a homeowner in Moreno Valley , one way to take capitalize on today's low rates is to apply to refinance your home. But there are other ways to take advantage, too.

In this 5-minute piece from NBC's The Today Show, you'll learn of a half-dozen ways to exploit the current rate environment, including:

• Refinance a car loan from a high rate to a low rate, for cheap, in an hour
• Balance transfers between credit cards with teaser rates lasting up to 20 months
• Move some savings to an "online" bank where savings rates are higher

The interview's theme is to examine both where you're spending and saving your money, and make sure you're doing what's best for your budget.

Federal Reserve Chairman Ben Bernanke has pledged to hold the Fed Funds Rate near 0.000% until at least 2013. So long as the Fed Funds Rate is low, there will be places you can save.

Mortgage Rates Don't Move With The Fed Funds Rate

Last week, at its 5th scheduled meeting of the year, the Federal Open Market Committee voted to leave the Fed Funds Rate in its target range near zero percent.

The Fed Funds Rate has been near zero percent since December 2008 and, in its official statement, the FOMC pledged to leave the Fed Funds Rate untouched for at least another 2 years.

This doesn't mean mortgage rates will be untouched for 2 years, though. 

Mortgage rates and the Fed Funds Rate are two different interest rates; completely disconnected. If mortgage rates and the Fed Funds Rate moved in tandem, the chart at right would be a straight line.

Instead, it's jagged.

To make the point more strongly, let's use real-life examples from the past decade.

• June 2004, 529 basis points separated the Fed Funds Rate and the 30-year fixed mortgage rate
• June 2006, 168 basis points separated the Fed Funds Rate and the 30-year fixed mortgage rate

Today, the separation between the two benchmark rates is 407 basis points.

1 basis point is equal to 0.01%.

Between now and mid-2013, when the Fed may begin changing the Fed Funds Rate, the spread between rates will change based on economic expectation -- not Fed action (or non-action). If the economy is expected to improve, mortgage rates in Corona will rise and the spread will widen.

Should mortgage rates cross 6 percent before the Fed starts raising rates, it will create the widest interest rate spread in history, surpassing the 615 basis point difference set in August 1982. 

At the time, the Fed Funds Rate was 10.12% and mortgage rates averaged 16.27%.

On the other hand, if the economy shows signs of a slowdown for late-2011 and beyond, mortgage rates are expected to drop.

Shopping for a mortgage can be tough -- especially in a volatile environment like the current one. Mortgage rates move independent of the Fed Funds Rate. Make sure you're watching the proper market indicators. It's your best chance to lock the lowest rate possible.

What Perks Does Your Favorite Credit Card Offer?

Last week, the Federal Reserve pledged to leave the Fed Funds Rate near 0.000 percent until at least mid-2013. For credit card holders in california who carry a monthly balance, this is good news. Because of the Fed's call, credit card rates are unlikely to rise before mid-2013.

But cardholders can save on more than just interest costs, as you'll learn from this two-and-a-half minute piece with NBC's The Today Show. In the interview, you'll hear about "built-in" perks offered by most credit cards and ways by which you can save on everyday goods and services.

For example, did you know your everyday credit card might offer:

• Travel perks : Automatic trip cancellation protection and car rental insurance.
• Shopping perks : Discount admission to concerts and museums; free shipping from overseas.
• Consumer perks : Price protection against a drop in price; insurance against theft; extended warranties.

And it's not just "high end" cards that offer these options, either. Credit cards of all types do what they can to improve consumer loyalty. Offering free perks is just one way in which they try.

Most credit cards offer websites detailing cardmember perks and benefits. Visit the site of your favorite card and see where you might save on everyday items.

A Simple Explanation Of The Federal Reserve Statement (August 9, 2011 Edition)

Tuesday, the Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.

The vote was 7-3 — the first time in 5 meetings that the nation's Central Bank was non-unanimous and the first time since 1992 that the FOMC adjourned with as many as three dissenters.

In its press release, the FOMC had little good to say about the U.S. economy, noting that since its last meeting in July:

1. Growth has been "considerably slower" than expected
2. Labor market conditions have deteriorated
3. Household spendng has "flattened"

The Fed also noted that the housing sector remains depressed.

On the positive side, the Fed said that business investment in equipment and software continues to expand, and that energy costs have dropped and no longer contribute to inflationary pressures on the economy.

In fact, the Fed worries that inflation may be running too low for the country's good.

To that end, the Federal Reserve has pledged to keep the Fed Funds Rate in its current range near 0.000 percent "at least until mid-2013". This is a departure from prior statements in which the Fed gave no such date.

Mortgage market reaction to the FOMC statement has been positive this afternoon. Mortgage rates in california are improving, but note that sentiment can shift quickly -- especially in a market as uncertain as this one.

If today's mortgage rates look good in your household budget, consider locking in a rate.

The FOMC's next scheduled meeting is September 20, 2011.

A Simple Explanation Of The Federal Reserve Statement (June 22, 2011 Edition)

Wednesday, the Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.

The vote was 10-0 -- the fourth straight unanimous vote for the nation's Central Bank.

In its press release, the FOMC said that the economy is recovering, although "somewhat more slowly" than what was expected. Labor markets have been weaker than anticipated and the Fed believes that is, in part, a result of higher food and energy costs, and supply chain disruptions as a result of "tragic events in Japan".

Some economic bright spots identified by the Fed include expanding household spending, and increased business investment.

These comments were in-line with what Wall Street expected from Chairman Ben Bernanke and the members of the Federal Open Market Committee.

The Fed stayed on message with respect to inflation, too. It acknowledged inflationary pressures on the economy, but attributed them to rising commodity costs and the aforementioned supply-chain disruption. The Fed expects long-term inflation to be stable. 

And, lastly, the Federal Reserve re-affirmed its plan to end its $600 billion pledge to bond markets June 30, and to hold the Fed Funds Rate near zero percent "for an extended period" of time. 

Again, no surprise.

Mortgage market reaction to the FOMC statement has been even this afternoon. Mortgage rates in Moreno Valley are unchanged and leaning lower. Note that sentiment can shift quickly, however. If today's mortgage rates fit your budget, consider locking in your rate.

The FOMC's next scheduled meeting is August 9, 2011.

A Simple Explanation Of The Federal Reserve Statement (June 23, 2010 Edition)

Today, in its first meeting in 5 weeks, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged. 

The Fed Fund Rate remains within its target range of 0.000-0.250 percent.

In its press release, the FOMC said that, since April, "the economic recovery is proceeding" and that the jobs market "is improving gradually". Business spending "has risen significantly", too, with the exception of commercial real estate.

Today's statement is the 8th straight press release in which the Fed shows optimism for the U.S. economy, dating back to June 2009.  Since that time, the Fed has terminated all of the programs it created to support the economy through the economic crisis.

The recession is widely believed to be over.

And, although the Fed's statement acknowledged economic growth, it did highlight lingering threats, too.

1. Employers are still reluctant to hire new workers
2. European debt concerns could spill-over to the U.S.
3. Bank lending is contracting

Also, as expected, the Fed re-affirmed its plan to hold the Fed Funds Rate near zero percent "for an extended period", citing that "inflation has trended lower" recently.

Mortgage market reaction has been positive thus far. Mortgage rates in california are slightly improved post-FOMC.

The FOMC's next scheduled meeting is August 10, 2010.

A Simple Explanation Of The Federal Reserve Statement (April 27, 2011 Edition)

Earlier today, the Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.

The vote was 10-0 -- the third straight meeting after which the FOMC vote was unanimous.

In its press release, the FOMC noted that since its March 2011 meeting, the economic recovery is proceeding "at a moderate pace" and that labor markets conditions are "improving gradually". Household spending and business investment "continue[s] to expand" but the housing sector remains "depressed".

Furthermore, the FOMC's statement discussed the Federal Reserve's dual mandate of (1) Managing inflation levels, and (2) Fostering maximum employment. The statement acknowledged recent inflation pressures on the economy, but it expects those pressures -- because they're related to oil and food prices -- to be "transitory". Unemployment remains "elevated".

The FOMC statement also re-affirms the group's plan to keep the Fed Funds Rate near zero percent "for an extended period" of time, and to keep its $600 billion bond market support package -- more commonly called "QE2" -- intact.

The statement's verbiage suggests that a third support package may be created after QE2 ends in June 2011, depending on the needs of the economy.

Mortgage market reaction to the FOMC statement has been positive thus far. Mortgage rates in Moreno Valley are unchanged, but leaning lower. And, as always, market sentiment could shift quickly. If you like today's mortgage rates, consider locking in.

The FOMC's next scheduled meeting is a 2-day event, June 20-21 2011.

Mortgage Rates -- And Home Affordability -- At The Whim Of The Federal Reserve

The Federal Open Market Committee starts a two-day meeting today, the third of its 8 scheduled meetings this year.

The FOMC is a special, 12-person committee within the Federal Reserve. It's led by Fed Chairman Ben Bernanke and the group is responsible for voting on our nation's monetary policy. This includes setting the Fed Funds Rate, the rate at which banks borrow money from each other overnight.

The general public tends to confuse the Fed Funds Rate for "mortgage rates" but, as shown in the chart at top, the two interest rates are very different. There is no direct correlation between the Fed Funds Rate and everyday mortgage rates in Moreno Valley.

Since 1990, the two benchmark rates have been separated by as much as 5.29 percent, and have been as close as 0.52 percent.

Today, the separation between the Fed Funds Rate and the national average for a standard, 30-year fixed rate mortgage is 4.625 percent. This spread will widen -- or shrink -- beginning 12:30 PM ET Wednesday. That's when the FOMC adjourns and releases its public statement to the markets.

According to Wall Street, there's a 100% chance that the FOMC leaves the Fed Funds Rate in its current "target range" of 0.000-0.250 percent, the same range in which it's been since December 2008. Depending on the verbiage in the press release, plus the comments of Fed Chairman Ben Bernanke in his scheduled, 2:15 PM ET press briefing, mortgage rates aren't expected to steady as well.

If the Fed projects higher growth in late-2011/early-2012, or hints at new market stimuli, expect mortgage rates to rise on concerns about inflation. Inflation is bad for mortgage rates, in general.

On the other hand, if the Fed indicates that the economy is slowing down, or that it plans to withdraw its existing, $600 billion bond market stimulus, look for mortgage rates to fall.

It's hard to be a home buyer when the Federal Open Market Committee meets. There's just so much that can change mortgage rates and rising mortgage rates can affect purchasing power in a flash.

In the 6 months since November 2010, home affordability is off 9%.

So, if you're shopping for mortgages, or just floating a rate, consider getting locked in before the FOMC issues its press release Wednesday. Once the statement hits, mortgage rates could soar.

March Fed Minutes Show Inflation Risks And Rate Hikes On The Horizon

The Federal Reserve released its March 15 meeting minutes Tuesday. The notes revealed a Federal Reserve split between optimism and caution for the U.S. economy.

The minutes' official name is "Fed Minutes". It's a periodic publication, published 3 weeks after each meeting of the Federal Open Market Committee. The FOMC meets 8 times annually, so the Fed Minutes is published 8 times annually, too.

The Fed Minutes is similar to the meeting minutes released after a condo board gets together, or after a meeting of the Board of Directors at a large corporation. The minutes give a detailed account of the important conversations and debates that occurred among the attendees.

At the Federal Reserve, those conversations are deep and, as such, the minutes are long; much longer than the more well-known, post-meeting press release anyway.

Whereas the press release is measured in paragraphs, the minutes are measured in pages.

Here is some of what the Fed discussed last month:

• On inflation : Pressures are rising, but largely because of food costs and oil costs.
• On housing : The market remains "depressed" with large inventory and weak demand.
• On stimulus : The Fed will keep its $600 billion bond plan in place.

In addition, there was talk about ending the Federal Reserve's accommodative monetary policy (i.e. the near-zero percent Fed Funds Rate). The FOMC's voting members unanimously elected to leave the Fed Funds Rate near 0.000 percent last month, but there was talk of raising the benchmark rate later this year.

Conforming and FHA mortgage rates in Corona are mostly unchanged since the Fed Minutes release.

A Simple Explanation Of The Federal Reserve Statement (March 15, 2011 Edition)

Today, for the second straight meeting, the Federal Open Market Committee voted unanimously to leave the Fed Funds Rate unchanged within its target range of 0.000-0.250 percent.

The vote was 10-0.

In its press release, the FOMC noted that since its January 2011 meeting, the economic recovery "is on firming footing", and that the labor markets are "improving gradually". In addition, household spending "continues to expand". Nonetheless, the Fed said, the economy remains constrained by rising commodity prices and the "depressed" housing sector.

The FOMC statement also re-affirms the group's plan to keep the Fed Funds Rate near zero percent "for an extended period", and to keep its $600 billion bond market support package -- more commonly called "QE2" -- intact.

And, lastly, for the third straight time, the Federal Open Market Committee's post-meeting release statement included a paragraph detailing the Federal Reserve's dual mandate of managing inflation levels, and fostering maximum employment. Although it acknowledged inflationary pressures on the economy, the Fed said inflation remains too low for the economy currently, and that unemployment remains "elevated". 

In time, the Fed expects both measurements to improve.

Mortgage market reaction to the FOMC has been negative since the statement's release. Mortgage rates in Corona are unchanged, but poised to worsen.

The FOMC's next scheduled meeting is a 1-day event, March 15, 2011.

A Simple Explanation Of The Federal Reserve Statement (January 26, 2011 Edition)

Today, the Federal Open Market Committee voted 10-to-0 to leave the Fed Funds Rate unchanged within its target range of 0.000-0.250 percent.

In its press release, the FOMC noted that since December's meeting, economic growth is ongoing, but at a pace deemed "insufficient" to make a material impact on the jobs market. In addition, the Fed said household spending "picked up" late last year, although it continues to be held back by joblessness, tight credit and lower housing wealth.

This is similar to the language used in the FOMC's November and December 2010 statements.

Also like its last two statements, the Fed used this month's press release to re-affirm its plan to keep the Fed Funds Rate near zero percent "for an extended period", and to keep its $600 billion bond market support package in place.

And finally, of particular interest to home buyers and mortgage rate shoppers, for the second straight month, the Federal Open Market Committee's statement contained an entire paragraph detailing the Federal Reserve's dual mandate of managing inflation levels, while fostering maximum employment. 

The Fed acknowledges progress toward this goal, but calls that progress "disappointingly slow". Inflation is too low right now, and joblessness too high.

Over time, the Fed expects both measurements to improve.

Mortgage market reaction to the FOMC has been positive since the statement's release. Mortgage rates in Moreno Valley are unchanged, but poised to improve.

The FOMC's next scheduled meeting is a 1-day event, March 15, 2011.

The Fed Meets Today. What It Means To Mortgage Rates.

The Federal Open Market Committee begins a 2-day meeting today in Washington D.C. It's the group's first meeting of 2011 -- one of 8 scheduled for the year.

The Fed meets every 45 days, on average. Its last meeting was December 14, 2010.

Rate shoppers and home buyers should make a note. Mortgage rates and home affordability could change dramatically beginning tomorrow afternoon.

Because Wall Street watches FOMC meetings closely, so should you. The meetings provide insight on the future of U.S. monetary policy, as told by the nation's central banker. Investors make trades based on the FOMC's commentary which is one reason why mortgage rates tend to undulate through the hours leading up to the FOMC's adjournment, and the days immediately after.

Wall Street is shifting old bets, and placing new ones.

A terrific example of this is what happened after the Fed's November 3, 2010 meeting.

In its post-meeting press release, the Federal Reserve announced a new, $600 billion, market-bolstering plan dubbed "QE2". Wall Street had widely expected the Fed to create the program, but had underestimated its size.

Starting a $600 billion program sparked fears of a Fed-led inflation run, which, in turn, caused mortgage markets to deteriorate in a hurry. In the 3 days following the program's announcement, mortgage rates spiked to multi-month highs and have not since recovered.

QE2 marked the beginning of the end of the Refi Boom and low rates. Today, conforming rates in california are relatively low as compared to higher, but are much higher than they were prior to the FOMC's November 2010 meeting.

Then, December's FOMC meeting did little to change the direction of rates. We shouldn't expect that January's will, either. After the FOMC's 2:15 PM ET adjournment Wednesday, mortgage rates should resume climbing, as they have done for the past 10 weeks.

If you're shopping for a mortgage rate, therefore, the prudent move is to lock prior to Wednesday's FOMC adjournment because, after once the Fed's outlook is released, it will be too late. 

A Simple Explanation Of The Federal Reserve Statement (April 28, 2010 Edition)

Today, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged within in its current target range of 0.000-0.250 percent.

In its press release, the FOMC noted that, since March, the U.S. economy "has continued to strengthen" and that the jobs markets "is beginning to improve".  This is a step up from the last meeting after which the Fed said jobs were "stabilizing". 

It also reiterated that business spending "has risen significantly".

Today's statement marks the 7th straight press release in which the Fed shows optimism for the U.S. economy. Furthermore, the Fed has now closed all but one of the programs it created to support markets during last year's financial crisis.

Threats remain to growth, however. The Fed fingered a few:

1. Employers are reluctant to hire new workers
2. High unemployment threatens consumer spending
3. Consumer credit (still) remains tight

Also in its statement, the Fed re-acknowledged its plan to hold the Fed Funds Rate near zero percent "for an extended period".  This was expected.

Overall, the statement's tone was positive and the Fed noted that inflation is within tolerance. 

Mortgage market reaction has been muted thus far. Mortgage rates in Corona are unchanged post-FOMC.

The FOMC’s next scheduled meeting is a 2-day affair, June 22-23, 2010.  The 55-day span between meetings will be the FOMC's longest of 2010.