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…

Rate Hike Pause Predicted, Investors Watching Closely For End Of Year Indicators

By PATRICK LAVERY With the end of the third quarter of 2023 in sight, indications are that the Federal Reserve will pause hiking its federal funds rate this week – as it did in June before again raising the target range in July – and investors will be watching closely on Wednesday to see if Chairman Jerome Powell gives any indication as to what they might do to end the calendar year. The FOMC’s course of action, while holding no direct bearing on mortgage rates, acts as a strong indicator of what direction those rates will go in next. According to Business Insider, a pause on the part of the Fed won’t do much to move mortgage rates, currently above…

Questions Linger Before Next Week’s FOMC Meeting

By PATRICK LAVERY When last we heard from the Federal Reserve on interest rates, on June 14, the Federal Open Market Committee agreed not to raise the target range for the federal funds rate for the first time in more than a year. With the Fed’s next meeting now less than a week away, could Chairman Jerome Powell be preparing to announce one of the hikes that he said in June might still be remaining for this year? Or will the FOMC stick to a holding pattern? And how are those developments going to impact a U.S. housing market that Powell has continuously characterized as sluggish throughout 2023? It is predicted that the central bank will deliver a quarter of…

Federal Reserve Pauses Interest Rate Hikes

By PATRICK LAVERY The Federal Open Market Committee called a pause on their rate hikes Wednesday, electing to keep the target range for the federal funds rate unchanged at 5% to 5.25% while continuing to significantly reduce securities holdings. It was not a complete victory lap for Federal Reserve Chairman Jerome Powell, who told reporters at a press conference that the FOMC overwhelmingly expects to raise interest rates “somewhat further” before the end of 2023. The reason for the future uncertainty in interest rates continues to be inflation, which is still “well above” the Fed’s longer-run 2% goal, according to Powell. The Summary of Economic Projections released concurrently with Wednesday’s announcement kept that 2% target destined for 2025. A survey…

Fed Raises Rates Another Quarter Point as Powell Hints at Possible Pause

By PATRICK LAVERY Incremental but persistent increases in the Federal Open Market Committee’s policy interest rate have now officially entered a second year, with Federal Reserve Chair Jerome Powell announcing another quarter-percentage point hike on Wednesday. The target rate is now 5.25%, up five full points since April 2022. Powell reiterated in his prepared remarks that the Fed’s objective is returning inflation to 2%, its historic target. Unfortunately, Powell acknowledged, interest rates remain stubbornly high. Powell said that for the 12 months ending with this past March, total Personal Consumption Expenditures prices rose 4.2%, excluding food and energy prices which tend to be more volatile, while core PCE prices were up 4.6%. “Inflation has moderated somewhat since the middle of…

Policy Memoir About Averting 2020 Mortgage Meltdown Published

By PATRICK LAVERY A new book providing insider insight into how millions of Americans were provided mortgage and rental assistance in response to the COVID-19 pandemic has been released. “Shelter from the Storm: How a COVID Mortgage Meltdown Was Averted” is by Cato Institute Senior Advisor Mark Calabria who was, at the outset of the pandemic, the director of the Federal Housing Finance Agency, overseeing Fannie Mae, Freddie Mac, and Federal Home Loan Banks. Calabria’s new policy memoir, promoted as “a story about how you can directly help Main Street without bailing out Wall Street,” not only takes a look at the issues that surfaced in 2020 and beyond but also how the mistakes of the 2008 financial crisis –…

Commercial Spaces: The Future Of Malls

By PATRICK LAVERY “Let’s go to the mall!” wasn’t just a catchphrase popularized by alter-ego Robin Sparkles on the sitcom “How I Met Your Mother.” In the 1980s and 1990s, shoppers flocked to malls to satisfy their needs for a variety of goods, and adolescents went there just to hang out, patronize the food court, and be social. But sometime in the two decades between the turn of the millennium and the onset of the COVID-19 pandemic, the megamall as an American institution gave way to the likes of Walmart, eBay, and Amazon. It’s gotten to the point where thumbing through slideshows of abandoned malls has become almost as perverse a pleasure as seeing what’s happened to former Olympic venues.…

Banking Troubles Slow Down Rate Hikes

By PATRICK LAVERY The result of this week’s two-day Federal Open Market Committee meeting was not nothing, but neither was it as aggressive a decision as officials at the Federal Reserve might have liked to make. Once again, the target range for the federal funds rate was raised one-quarter of a percentage point, bringing them up to 4.75% to 5%. What kind of news that turns out to be for the housing market remains to be seen, but it doesn’t stray too much from what several industry experts told The Mortgage Note last week. In fact, the 25-basis point hike was exactly what was predicted in TMN’s interview with Nadia Evangelou, senior economist and director of real estate research for…

It’s Their Move: What Will The Feds Do About Interest Rates?

By PATRICK LAVERY Speculation about what actions leaders at the Federal Reserve will take at their meeting starting Tuesday has been building for weeks, and opinions over the right course of action are varied. Should they stay the course, steadily raising interest rates to try to continue to curb inflation? Should they be more aggressive? Or should they pull back, letting the United States slide into a recession? These questions have been swirling for months but the sudden collapse of Silicon Valley Bank and New York-based Signature Bank changed the dynamics of the conversations seemingly overnight. Nadia Evangelou, senior economist and director of real estate research for the National Association of Realtors, said prior to the bank collapses, she could…

Rate Hikes Happening As Spring Homebuying Season Starts

By PATRICK LAVERY Interest rates are rising as the spring homebuying season starts in many parts of the country. Federal Reserve Chair Jerome Powell indicated in his testimony before U.S. lawmakers this week that although the central bank’s policymakers have yet to decide how large their next rate hike will be, “the ultimate level of interest rates is likely to be higher than previously anticipated” based on the latest economic data. They will be meeting on March 21 and 22. “As I have mentioned in my testimony, the data we have seen so far this year suggests that the ultimate level of rates will need to be higher. We still have some more data to come in between now and…