Finally — The Federal Reserve Hikes Interest Rates

Federal Reserve Hikes Interest Rates For The First Time Since 2006

Contrast this with the the period from May 2004 to June 2006 — 18 rate hikes in all.

Chair Yellen delivers opening remarks at monetary policy research conference

Chair Janet Yellen delivers opening remarks at monetary policy research conference.

The wait is over. The Federal Reserve announced Wednesday that it is increasing the target for short term interest rates to a range of 0.25% to 0.50% from a range of 0% to 0.25%. The move, while small, is historically significant. The Fed has held interest rates near zero for seven years and has not raised them since 2006.


photo credit: M2407962  (license)

Further FED Intervention Moves Mortgage Rates Lower

Mortgage Rates Edge Lower on Further FED Action — or Inaction

Like a junkie hooked on drugs, the Federal Reserve vows to continue its bond buying program.

JunkieFreddie Mac released the results of its Primary Mortgage Market Survey® (PMMS®) for the week ending September 19, 2013, showing average fixed mortgage rates moving lower amid signs of a weakening economic recovery, which in part also prompted the Federal Reserve (Fed) to continue its bond buying program. The problem is that the FED is causing the economy to stiffen in the first place. Even if the FED hints at “tapering” the QE, the economy heads for the dumpster. FED’s then answer, “Buy more bonds,” and so it goes.

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30-Year Fixed-Rate Mortgage Sinks to Record Low

All-Time Low: 30-Year Fixed-Rate Mortgage Averages 3.40 Percent

As expected, fixed mortgage rates continued their slide as the Fed (rightly or wrongly) buys up more mortgage securities.

Falling rates, prices.Freddie Mac released the results of its Primary Mortgage Market Survey® (PMMS®) for the week ending September 27, 2012, showing fixed mortgage rates breaking through previous lows largely on the back of the Fed’s newest round of mortgage securities purchases. I don’t agree that this new round of QE is likely to bring more buyers to table. Homebuyer affordability has already been at record levels for months and although we’ve seen a steady marginally improving market, this latest action by the FED is unlikely to start a buying stampede. All mortgage products, except the 5-year ARM, averaged new record lows.

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Bernanke: Lack of Down Payment, Job Concerns Hurt Housing. Duh!

Federal Reserve’s semiannual Monetary Policy Report to the Congress.

This guy from Harvard and MIT still has no clue.

Chairman Ben S. Bernanke Before the Committee on Financial Services, U.S. House of Representatives, Washington, D.C. February 29, 2012

Ben - I Have No Clue - Bernanke

courtesy Gage Skidmore / Flickr

“In the housing sector, affordability has increased dramatically as a result of the decline in house prices and historically low interest rates on conventional mortgages,” Bernanke said. “Unfortunately, many potential buyers lack the down payment and credit history required to qualify for loans; others are reluctant to buy a house now because of concerns about their income, employment prospects, and the future path of home prices.”

“On the supply side of the market, about 30 percent of recent home sales have consisted of foreclosed or distressed properties, and home vacancy rates remain high, putting downward pressure on house prices.”

“More-positive signs include a pickup in construction in the multifamily sector and recent increases in homebuilder sentiment.”

Ben got paid for that information. Thank’s Ben, but any REALTOR® could have reported these very same facts to Congress months and months ago. Honestly — This guy from Harvard and MIT still has no clue!

Read full Monetary Policy Report to the Congress.


The Beige Book: Housing Still Sagging

The Beige Book: Prepared at the Federal Reserve Bank of Kansas City and based on information collected on or before August 26, 2011.

Federal Reserve Beige BookThe Federal Reserve soi-disant Beige Book reported today that economic activity grew at a lesser pace than in previous six-week reports; and increased consumer uncertainty curtailed housing sales in most areas.

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Federal Reserve: Why Won’t They Buy?


Quote: Mark Goldman

The Federal Reserve hoping to revive demand for housing, vowed to not raise key rates until 2013. This ploy is backfiring. Why? Record low rates have failed to spark more buying because buyers now see no urgency to… well, buy; and Mark Goldman makes obvious a second big reason…

“Low mortgage rates are only helpful to home buyers who aren’t paralyzed with fear after watching their 401(k) disappear,” says Mark Goldman, a lecturer at the Corky McMillin Center for Real Estate at San Diego State University. “For now, people see the stock market as a casino table.”

Source: “Housing’s Drag on Economy May Worsen,” Bloomberg News (Aug. 21, 2011)




Will Low Rates Entice Nervous Consumers?



“Under normal circumstances, the Fed’s announcement might have attracted new home and car buyers and prompted credit card holders to rack up fresh charges. But with unemployment high and those with jobs worried about keeping them, consumers are more concerned about paying off the loans they already have than adding more debt. And by showing its hand for the next two years, the Fed may have inadvertently invited prospective borrowers to put off large purchases.”

 MOTOKO RICH and TARA SIEGEL BERNARD, New York Times, Aug. 14, 2011

Beige Book Theme: Weak Housing Market


Federal Reserve Beige BookBusiness activity in the Fourth District expands but a slower rate since last report weighed down by weak Housing Market.

“New-home construction remains at a low level, with only two of our contacts reporting an uptick in sales during June. Purchases were mainly in the move-up buyer categories. Contractors expect that single-family construction will remain depressed until potential buyers can more easily sell their existing homes and the job market begins to gain some traction. List prices of new homes held steady, while the use of discounting grew. Upward pressure on the cost of building materials was reported by almost all of our contacts. Spec inventories were reduced further relative to year-ago levels. General contractors continue to work with lean crews, and no hiring is expected in the near term. Many subcontractors are struggling to stay in business and are bidding jobs below cost.”

Beige Book, Fourth District–Cleveland, July 2011

Ohio US Senator Requests Fed Uphold Homeowners’ Security

Senator Brown has asked Federal Reserve to reverse proposed revisions to TILA Rules that would do away with vital borrower safeguards.

senate legislationSen. Sherrod Brown (D-OH) and five Senate Banking Committee members (Dodd, Reed, Merkley, Akaka, and Johnson) in a letter to the Federal Reserve Board of Governors urged them to reconsider proposed rules that would eliminate the ability of homeowners to stop foreclosures and rescind predatory home loans. The proposed rule would prevent homeowners from cancelling mortgages that violate the Truth in Lending Act (TILA).

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