Providing
Useful Information, Advice, Education and a Fair Honest Deal on your Mortgage
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Providing
Useful Information, Advice, Education and a Fair Honest Deal on your Mortgage
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 Which has more force, Mother Nature or the Fed?..... September 22 FOMC ups rates to 3.75%, says Katrina could fuel inflation ..... September 20 The Week in Review..... September 18 |
FOMC ups rates to 3.75%, says Katrina could fuel inflation ..... September 20 2:22 PM EST You can read the Fed's statement on the Board of Governor's Federal Reserve website for yourself. For the 11th straight time, the Fed has increased the Federal funds rate, citing inflationary pressures from energy prices as the reasoning in raising rates one more time. The Fed did make a point of stating that in the long term, inflation was under control. How does this affect mortgage rates? Very little today as investors had priced in this move by the Fed over the last two weeks...(as usual) Although many borrowers will call when the Fed reduces rates to get a better rate or may fear getting a higher rate when thhe Fed raises rates as they did today, the actual announcement usually does not affect long term mortgage rates. The rates that the Fed announced today will affect adjustable rates and the Prime Rate, but when it comes to a 15 year Fixed or a 30 year Fixed rate, the change has already occurred. In fact, rates over the past two weeks have steadily gone up as more and more investors realized that the Fed would continue their rate increases today due to the higher energy prices that have resulted from the storm. Now, mortgage rates will turn their focus towards the rebuilding of the Gulf Coast and how congress intends to pay for the rebuilding along with the new Hurrricane Rita. More on that in coming days! Have a great day.......... Updated Forecasts This continuing trend of higher and higher rates has caused me to change the rate lock advisory to lock for all four stages. In addition, I have updated my forecast to show rising rates for the second half of 2005. This is a combination of what we have seen in both the market and the economic reports over the last 3 months and the continued tendencies of the market to shoot higher of very little good news. Now, on the bright side, the global economy is still going nowhere. We have quite a quandary where if the market does not rise in response to continued increases by the Fed we could see an inverted rate curve due to the global pressures. This is still a very good possibility and should we see anything close to an inversion, rates could drop quickly. The very high number of mortgages that are ARM's vs Fixed rates would switch in a heartbeat if you can get a 30 year fixed at a lower rate than a 5 year ARM!! If this fine line were to get crossed, you can throw all the forecasts of higher rates right out the window. Stay tuned! See you tomorrow! Where are rates headed in the next 3 months? It looks like the trend will be heading steady or higher with new projections out and the higher oil prices and Fed rate increases driving rates over the next 3 months Where are rates going this year? The entire first part of the year, I have been sticking with the experts position that for the year of 2005, we can expect to see mortgage rates to level out in the 6.5% to 6.75% range for a 30 year fixed rate mortgage by the end of the year. Although this forecast has been the same for the last 3 years and has yet to materialize, this long term forecast must be still taken into account. My personal expectations are that 30 year rates will be rising for the second half of 2005 barring any more terrorist attacks. If I were financing/refinancing a home . . . . I would Lock if my closing was within 10 days I would Lock if my closing was 11- 30 days away I would Lock if my closing was 31 - 45 days away I would Lock if my closing was more than 45 days away *As always, this commentary is only my personal opinion if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of any/all other borrowers. DailyInterest.com
- guide to Home Mortgage Loan Advice & Education for refinancing and
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