Friday, September 14 2012
The Federal Reserve announced Thursday that, in an effort to re-ignite economic recovery, it was taking aim at mortgage rates — a move that will likely take rates even lower from their current record lows.
The Federal Reserve announced it will purchase $40 billion of mortgage-backed securities that will help boost the recovery in the housing market. What’s more, the central bank said that it will continue with the purchase program until the economy shows greater improvement, particularly with unemployment.
"These actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative," according to the Fed in a public statement.
The Fed says the economy still has a long way to go toward recovery. The Fed predicts the jobless rate will stay above 7 percent well into 2014 and that economic growth will remain slow in the coming months.
At its Thursday meeting, the Fed left its funds rate unchanged at near-zero, but announced the rate — which has a bearing on mortgages — would remain at "exceptionally low levels" until at least mid-2015.
As mortgage rates sink lower, home shoppers have been taking advantage. The Mortgage Bankers Association announced this week that mortgage applications for home purchases were up 8.1 percent for the week ending Sept. 7. Mortgage applications for purchases also were up 7 percent from year-ago levels, MBA said.
"While low interest rates impose some costs, Americans will ultimately benefit most from the healthy and growing economy that low interest rates promote," Fed Chairman Ben Bernanke said Thursday following the Fed committee’s meeting.
Source: “Fed Pulls Trigger, to Buy Mortgages in Effort to Lower Rates,” CNBC (Sept. 13, 2012)
Thursday, June 10 2010
The Federal Reserve’s periodic survey of economic conditions, known as the Beige Book, this week reported growth in all 12 regions for the first time since 2007.
New York. Commercial real estate leasing has picked up noticeably although vacancy rates continue to rise in some areas. Residential rents appear to have bottomed.
Monday, May 31 2010
The near-record low mortgage rates seen during the past few weeks may not be around much longer.
Thursday, May 13 2010
With the housing recovery still fragile, it’s hard to look ahead with anything but caution. However, the long-term prospects for the market are “incredible,” FHA Commissioner David Stevens told REALTORS® yesterday in the opening forum of the 2010 NAR Midyear Legislative Meetings & Trade Expo.
Young households today represent a demographic block larger than even the baby boomers, and their entry into the housing market promises to help build “an incredible real estate market in the future,” said Stevens. But first the housing market must move from recovery to stability and then to long-term growth, and that will only happen if investors regain confidence in the mortgage market. And for that to happen, the mortgage market must be reformed to reward transparent financing structures.
Stevens credited NAR’s role in helping Congress and the administration stabilize the market through its support of a “mosaic” of pragmatic policies, such as:
• The Federal Reserve’s $1.25 trillion dollar investment in Fannie Mae and Freddie Mac mortgage backed securities, which helped keep interest rates historically low.
That mix of programs has led to today’s housing recovery but the job won’t be finished, he says, until the federal government steps out of the picture and the market stands on its own. “We constantly talk about exit strategy,” Stevens said, referring to the administration’s goal of unwinding its mortgage-market interventions.
To help protect the recovery, Stevens urged REALTORS® while they’re in Washington this week to convince lawmakers to pass FHA reform legislation under consideration in the House as soon as possible. That legislation, H.R. 5072, would enable FHA to lower the upfront mortgage insurance premium and instead fold a higher annual premium into the loan, a change that would align FHA with the approach used in the private sector. The legislation would also give FHA more tools for clamping down on bad lenders.
The changes in the mortgage insurance premium are needed to help FHA improve its financial picture and restore its reserves to its congressionally mandated level. Not having the authority it needs to change its premium structure “is costing FHA $300 million a month in money it’s not getting,” he said.
“You are the recovery,” he told the packed room of REALTORS®. “Now we’ve got to finish the job.”
Saturday, March 06 2010
The average rate on a 30-year, fixed-rate mortgage was 4.97 percent this week, down from 5.01 percent last week, mortgage company Freddie Mac said Thursday. Last year at this time, rates on 30-year mortgages averaged 5.16 percent.
The average rate on 15-year, fixed-rate mortgages fell to 4.34 percent from 4.40 percent, Freddie Mac said.
Rates on five-year, adjustable-rate mortgages averaged 4.19 percent, down from 4.27 percent a week earlier. One-year ARMs rose to 4.33 percent from 4.22 percent.
Borrowers can reduce their interest rates by buying points, equal to 1 percent of the mortgage amount. The nationwide averages in Freddie Mac's survey were 0.7 points for 30-year mortgages and 0.6 points for 15-year, five-year and one-year loans.
"To me, these numbers say, for another week, so far so good," said Don Rissmiller, chief economist for New York-based Strategas Research Partners.
"The question that's lingering is what happens when the Fed removes its continuing support for housing."
A Federal Reserve program to buy as much as $1.25 trillion worth of mortgage-backed securities helped push rates to a record low 4.71 percent in December. On Wednesday, Federal Reserve Board Chairman Ben S. Bernanke reiterated the Fed's intention to end the purchases at the end of March.
His comments came in written testimony prepared for a House Financial Services Committee hearing that was postponed because of snow.
The Mortgage Bankers Association's index of mortgage applications fell 1.2 percent in the week ended Feb. 5, with the purchase gauge decreasing 7 percent and the refinancing gauge increasing 1.4 percent. More than two out of three mortgage applications were for refinance transactions over the first six weeks of this year, according to the association.
Friday, February 26 2010
Investors breathed a sigh of relief Wednesday when Federal Reserve Chair Ben Bernanke told Congress that interest rates are likely to remain low for an extended period. The economy, he said, "still requires support for recovery."
Tuesday, August 25 2009
Federal Reserve Chair Ben Bernanke said on Friday that he was optimistic the economy is about to take off.