The Federal Reserve Board had it's meeting this week and on Wednesday announced that they were leaving interest rates unchanged. The plan for now is to leave the Federal Funds rate where it currently is (between 0 and .25%). They expect to leave it there until about mid-2013. That doesn't mean mortgage rates will stay where they are, but they are expected to stay relatively low for now.
Wall Street was hoping that the Fed would announce a new economic stimulus program, but that did not happen. They are continuing with Operation Twist – the Fed is selling Treasury securities with a maturity of 3 years or less and using the proceeds to buy mortgage bonds with a maturity between 6 and 30 years.
In the Federal Reserve's press release, they did say that the US economy is slowly improving. They noted that since their last meeting in September, there was evidence that the economy has strengthened somewhat in the third quarter, led by consumer and business spending. The continuing weakness in the labor market, the softness in commercial real estate and the depressed housing market are hurting the economy. The good news is that inflation remains stable which is helping keep mortgage rates down.
They are hoping that the revised HARP loans will help the housing situation. There will be more news out in the middle of November regarding the new changes.
The next Fed meeting will be December 13, 2011. If everything remains the same, we will expect to hear more talk about a possible new economic stimulus plan – but that doesn't mean the Fed will do anything with it!!
Mortgage rates are still low, they have tried to break through the current levels and just don't seem to be able to . If you are thinking about buying or refinancing, now is a great time to do so. We know that rates will increase, but we don't know exactly when. We also know that there is a lot of room for rates to increase, but not much room for rates to decrease!
Leslie Vanderwerf, NMLS ID#335509, Advisors Mortgage - Email – Website
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