The Fed met this week and manged to lower interest rates – for now. They voted to keep rates where they have been for a long time and they changed a word in their speech. That word was "patient". Most would expect that it meant rates would immediately increase, however, they didn't.
This change means that the Fed could start to raise rates in June, but they also increased the requirements to raise rates. They lowered their forecasts for economic growth and inflation. They want to see further improvement in the labor market. They also want to see inflation at about 2% for a healthy economy. Inflation has been running at about 1% for the past year. All of this helped accomplish the Fed's goal of tying rate increases to the economy instead of a calendar date. With these comments, investors pushed expectations of rate hikes out even further.
The stock market rebounded and so did the mortgage bond market! It has been 7 months since the last quantitative easing program ended and mortgage rates are still low – and this may help keep them low for a bit longer. This is good news for anyone that is looking to buy a new home this spring. For those that have been thinking about refinancing, it gives you another chance at lower rates. I'm not sure we will see them drop much more, but we did see pricing improve Wednesday afternoon.
If you have been thinking about a new home or thinking about refinancing – again this may be the best time to do something – rates are fantastic and so are home prices!