The Federal Reserve kicked off its new strategy of clearer communications at the close of January’s Open Market Committee meeting last Wednesday afternoon. With just a few words, plus some charts (page 3), the Fed now expects to keep interest rates “extraordinarily low” for a period up to 18 months longer than the mid-2013 estimate previously in place. Also for the first time, the Fed officially revealed more explicitly that it will use an inflation target to help control monetary policy.

The Fed’s influence on mortgage rates

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There were plenty of economic twists and turns last week which allowed mortgage rates to find some additional room to fall.

Fed and economy send rates downward

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First, two questions to consider

Question1: What has been one of the biggest stumbling blocks of the HARP program?

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As expected, the Federal Reserve announced this afternoon that they are moving forward with their latest economic policy dubbed “Operation Twist,” which may lead to even lower mortgage rates.

What is Operation Twist?

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Many market observers are expecting the Federal Reserve to announce a new form of economic policy this afternoon following their two-day FOMC meeting.

What type of economic policy? Well, that remains to be seen.

On Monday, we provided some analysis of a few possible strategies the Fed could announce today, but at the moment, most of us are expecting that the Fed will announce plans to “buy longer dated Treasury securities in a bid to hold down interest rates.”

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Unfortunately, “mortgage rates fall to new record lows,” loses its potentially profound significance when it’s virtually the same headline week in and week out.

As HSH.com’s resident expert Keith Gumbinger writes in the latest Market Trends newsletter, besides mortgage rates, what else is left to cheer about? Read the rest of this entry »

HSH.com VP Keith Gumbinger provides us with a “friendlier” version of the June Fed minutes which begin to describe how it will begin to remove itself from the market and the impact it may have.

The minutes from the June Fed meeting were released yesterday, revealing a general format for how the Federal Reserve will end and exit all the extraordinary programs (”policy accommodation”) it employed to help push the economy out of the recession.

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Overall, mortgage rates dipped again last week as the future direction of inflation and our economic recovery remain unclear. Last Wednesday, the fed concluded a two-day meeting in which Federal Reserve Chairman Ben Bernanke held an unprecedented press conference immediately following the meeting.

As we anticipated, the chairman revealed little new information about how present and future conditions will influence the mortgage market. Read the rest of this entry »

Two weeks ago I suggested that homebuyers be ready to act swiftly if mortgage rates dipped, since most experts are predicting that rates will remain on an upward trend as we look forward. I hope you potential homebuyers out there were listening because mortgage rates did ease last week, and current market conditions have made things quite affordable.

-Get your own customized mortgage quote here-

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After reading the title of this post you may be saying to yourself, “Why would I want rates to rise?” Don’t get us wrong, historically-low mortgage rates have been one of the only things keeping the housing market moving. However, these rock-bottom rates are also an indication of just how poor things are, economically speaking.

That said, mortgage rates trended downward once again last week: Read the rest of this entry »