Powell Responds To Legislative Pressure As Feds Hold Rates Steady

By PATRICK LAVERY Saying the economy has surprised even the experts since the start of the COVID-19 pandemic nearly four years ago, Federal Reserve Board Chairman Jerome Powell on Wednesday announced that the Fed would hold its ground for now and keep its policy interest rate unchanged at its current range of 5.25% to 5.5%. “We believe that our policy rate is likely at its peak for this tightening cycle and that, if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” Powell said in prepared remarks following the first two-day Federal Open Market Committee meeting of 2024. The decision by the FOMC was not unexpected, and…

Rates Remain Effectively Unchanged At 6.62%

Mortgage rates remained basically unchanged last week as markets adjust to economic expectations for 2024. Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.62%, inching up from the week prior’s 6.61%. A year ago at this time, the 30-year FRM averaged 6.48%. This is the first increase since October. Rates have fallen more than a full percentage point since then, giving homebuyers more breathing room as they struggle against record-high unaffordability. The 15-year fixed rate dropped, however, from 5.93% to 5.89%. A year ago, it averaged 5.73%. Freddie Mac Chief Economist Sam Khater ascribed the news to the slow machinations of the market as it “digests incoming economic data.” He pointed out that rates stopped their…

Rates Fall Below 7%

Mortgage rates dipped below 7% for the first time since August after the Federal Reserve set the stage for rate cuts in the coming year. Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.95%, down from the week prior’s 7.03%. A year ago at this time, the 30-year FRM averaged 6.31%. It is now down nearly 90 bps in the last six weeks. This lowers the monthly mortgage payment for a $400,000 house to $2,118, down $183 from recent peaks. The 15-year fixed rate, on the other hand, rose to 6.38%% from 6.29%. A year ago, it averaged 5.54%. “Potential homebuyers received welcome news this week,” said Sam Khater, Freddie Mac’s Chief Economist.  “Given inflation continues…

Jobs Report Adds Pressure To Fed Ahead Of FOMC Meeting

The labor market experienced unexpected gains last month, with nonfarm payrolls rising 199,000, adding to a 150,000 bump in October. Unemployment fell to 2.7%, workforce participation increased, and monthly wage growth saw their biggest boost of the year. This paints a difficult picture for the Fed moving into its FOMC meeting, scheduled for this week. The Central Bank prefers a slower hiring pace to help it combat inflation. Its rate hikes have moved the economy closer to its 2% inflation target, down from 9.1% in June 2022 to 3.2% last month. Investors are hoping for cuts to federal funds rate sooner rather than later but November’s employment gains give the Federal Reserve more reason to hold interest rates at their…

Affordability FIopped In 2023, But Redfin Predicts A Brighter New Year

This year was one of the worst on record for affordability. But with the market at an all-time low, the only move now is up, according to a new analysis by Redfin. A homebuyer with the median U.S. income needed to spend 41% of their earnings on monthly home costs in 2023, a record high in Redfin’s data (dating to 2012) and fully 10% more than just two years ago.  In some hot markets, like California’s Anaheim and San Francisco, that number jumps to more than 80%. But Redfin expects mortgage rates and home prices to both cool in 2024, paving the way for more Americans to buy their dream home. “A perfect storm of inflation, high prices, soaring mortgage…

Rates Cool, Ending Weeks-Long Upward Streak

Borrowers struggling with rampant unaffordability are seeing some relief as mortgage rates cool, ending an upward swing. Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 7.76%, down from 7.79%. A year ago at this time, the 30-year FRM averaged 6.95%. The 15-year fixed rate remained unchanged at 7.03%. A year ago, it averaged 6.29%. “The 30-year fixed-rate mortgage paused its multi-week climb but continues to hover under 8%,” said Sam Khater, Freddie Mac’s Chief Economist. “The Federal Reserve again decided not to raise interest rates but have not ruled out a hike before year-end. Coupled with geopolitical uncertainty, this ambiguity around monetary policy will likely have an impact on the overall economic landscape and may continue…

Fed’s Decision To Hold Steady Welcome News In Mortgage World

By PATRICK LAVERY As experts almost unanimously predicted, the Federal Reserve Board on Wednesday held its target range for the federal funds rate at 5.25% to 5.5%, meaning after a year and a half of upheaval, the range will approach the end of 2023 not having budged for more than a third of this year, from the last rate hike at the end of July until at least the Federal Open Market Committee’s next meeting two weeks before Christmas. That may belie the fact that the Fed has raised the rate a total of 5 1/4 percentage points since early 2022, but for now, the stability is welcome news – at least in the housing market. “Mortgage rates fell this…

Watching And Waiting For The Fed’s Next Move

By PATRICK LAVERY When the Federal Open Market Committee meets this week analysts will be looking for signs of what’s next and it may be anyone’s guess. At the Mortgage Bankers Association’s annual convention and expo in Philadelphia this month, MBA Chief Economist Michael Fratantoni told attendees that they expect the Feds will maintain the federal funds rate target range and do not expect an increase from them again this year. Fratantoni projected there will be at least two cuts in 2024, and possibly more in 2025. But then Patrick Harker, the president and CEO of the Federal Reserve Bank of Philadelphia, took the stage the next day and said rates may have to stay high in order for them…

Fed’s Policies Take Center Stage At MBA Convention In Philadelphia

By KIMBERLEY HAAS The president and CEO of the Federal Reserve Bank of Philadelphia knew he was facing a tough crowd when he took the stage during a Monday morning session at the Mortgage Bankers Association’s annual convention and expo. “I stand here this morning fully aware of the mood in this room and I am also fully aware of the way the actions we on the FOMC have taken over the past 18 months in our efforts to tame inflation to get it back to a 2% annual target have, in their own way, contributed to the current mortgage climate,” Patrick Harker said. Harker said he met with community members this summer to see firsthand the impacts that monetary…

Federal Reserve Holds Rates Steady

By PATRICK LAVERY It wasn’t a reversal by any means, but the Federal Reserve Board voted Wednesday to maintain the federal funds rate target range. Following the July unfreezing of June’s pause, that range is, for now, staying at 5.25% to 5.5%. Federal Reserve Chairman Jerome Powell, in remarks to the press following the board’s latest release on monetary policy, stated once again his “dual mandate” to stabilize prices while keeping employment high. “Given how far we have come, we are in a position to proceed carefully as we assess the incoming data and the evolving outlook and risks,” Powell said. “Real interest rates now are well above mainstream estimates of the neutral policy rate, but we are mindful of…