What Do These “Minutes” Mean?
Mortgage markets were hurting Wednesday after the Federal Reserve released the minutes from its January 26-27, 2010 meeting. Mortgage rates in Iowa are now at their highest levels since the start of the year. Ouch.
The Fed Minutes are a follow-up document, delivered three weeks after an official (closed doors) FOMC meeting. It’s a companion piece to the post-meeting press release, detailing the debates and discussions that shaped our central bankers’ policy decisions.
The Minutes is a terrific look into the Fed’s collective mind and, yesterday, Wall Street didn’t like what it saw. Specifically, the new report disclosed that:
- The Fed plans to break support for mortgage markets after March 31, 2010 (not surprising to us)
- Raising the Fed Funds Rate will be a key part of the Fed’s strategy to tighten monetary policy
- The fundamentals behind consumer spending strengthened modestly
Rates Predicted to Jump After March 31, 2010
Furthermore, the Fed Minutes said that there is a growing risk of “higher medium-term inflation”. Inflation, of course, is awful for mortgage rates.
Overall, the Fed’s economic optimism appeared stronger after its January meeting as compared to its December one. A stronger economy should lead to better job growth and higher home prices throughout 2010. But again, remember good news for the economy is bad news for mortgage rates!
Mortgage rates were up Wednesday, but they remain historically low. And many analysts think that after March 31, 2010, rates will rise even more. Therefore, if you’re buying a home in the near-term, or know you’ll need a new mortgage, consider moving up your time frame.
Every 1/8 percent makes a difference in your household budget. Specifically, it’s like a 1.125% increase in a home’s price (when it comes to payment).
If you’re looking to make a purchase and need some help, I’d love to help out. I answer my own emails and have time to take great care of you. All of my contact information is on the right hand side of this page!
