Archive for the ‘FOMC Minutes’ Category

Fed Minutes December 2010The Federal Reserve released its December 14 meeting minutes Tuesday afternoon. There wasn’t much there to disturb mortgage markets, thankfully.

The “Fed Minutes” is an official recap of the most recent meeting of the Federal Open Market Committee. It’s published 8 times annually, 3 weeks after the FOMC adjourns.

The Fed Minutes is similar to the meeting minutes released after a corporate conference or condo association gathering in that they provide additional details about the conversation and debate that occurred between meeting attendees.

The Fed Minutes are a lengthy companion to the Federal Reserve’s brief, more well-known, post-meeting press release. But, 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 : Core inflation levels “trend lower”; disinflation risks are low.
  • On housing : The market is still “quite depressed”; demand is “very weak”.
  • On stimulus : The Fed will stick to its $600 billion support plan

In response, conforming mortgage rates in California are unchanged today.

The no-change in rates is welcome news for this month’s home buyers and other people wanting to get a jump on the “Spring Buying Season”. Mortgage rates have been trending higher since November, erasing 7 months of gains in 7 weeks, and rapidly approaching the psychologically-important 5 percent figure.

Currently, Freddie Mac reports the average 30-year fixed mortgage rate as 4.86%.

As compared to November, mortgage rates are higher. As compared to history, however, mortgage rates remain low. If you are still floating a rate, or have otherwise not locked, your opportunity may be ending. Once the economy moves to higher gear, mortgage rates will be among the first of the casualties.

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FOMC November 2010 MinutesThe Federal Reserve released its November 2-3, 2010 meeting minutes Tuesday afternoon. Mortgage rates in California have been on the move since.

The Fed Minutes is a comprehensive review of Federal Open Market Committee meetings; a detailed look at the debates and discussions that shape our country’s monetary policy. The report is published 3 weeks to-the-day after the FOMC adjourns.

Fed Minutes add depth to the briefer, more well-known “statement” to the markets which is issued upon adjournment. As a comparison:

If the Fed Statement is the executive summary, the Fed Minutes is the novel. And, the extra words matter.

When the Federal Reserve publishes its minutes, it gives clues about the groups next policy-making steps.  For example, in November’s minutes, it’s revealed that the Fed discussed setting inflation targets for the economy; holding occasional policy briefings for the press; and, working to set yields on instruments such as the 10-year Treasury note.

In addition, the Federal Reserve acknowledged a video conference hosted October 15, the second such “unannounced” meeting of the year.  The other was May 9, 2010.

Bond markets have not taken kindly to the Fed Minutes. The minutes show a propensity toward Fed “action”, most of which markets believe to be inflationary. Inflation leads to higher mortgage rates and that’s exactly what we’ve seen.

As compared to Tuesday morning, mortgage applicants in Peoria are finding conforming and FHA mortgage rates to be higher by as much as 0.375 percent. In “real life” terms, assuming a 30-year term, that’s an extra $264 in annual mortgage payments per $100,000 borrowed.

If you’re still rate shopping, consider getting locked today. As a result of the recent shift, mortgage rates are now at a 4-month high.