Fed Minutes Help Push Mortgage Rates To 4-Month High

The Federal Reserve released its November 2-3, 2010 meeting minutes Tuesday afternoon. Mortgage rates in California have been on the move since.

The Fed Minutes is a comprehensive review of Federal Open Market Committee meetings; a detailed look at the debates and discussions that shape our country's monetary policy. The report is published 3 weeks to-the-day after the FOMC adjourns.

Fed Minutes add depth to the briefer, more well-known "statement" to the markets which is issued upon adjournment. As a comparison:

• The November 3 statement contained 497 words
• The November 3 meeting minutes contained 6,623 words

If the Fed Statement is the executive summary, the Fed Minutes is the novel. And, the extra words matter.

When the Federal Reserve publishes its minutes, it gives clues about the groups next policy-making steps.  For example, in November's minutes, it's revealed that the Fed discussed setting inflation targets for the economy; holding occasional policy briefings for the press; and, working to set yields on instruments such as the 10-year Treasury note.

In addition, the Federal Reserve acknowledged a video conference hosted October 15, the second such "unannounced" meeting of the year.  The other was May 9, 2010.

Bond markets have not taken kindly to the Fed Minutes. The minutes show a propensity toward Fed "action", most of which markets believe to be inflationary. Inflation leads to higher mortgage rates and that's exactly what we've seen.

As compared to Tuesday morning, mortgage applicants in Corona are finding conforming and FHA mortgage rates to be higher by as much as 0.375 percent. In "real life" terms, assuming a 30-year term, that's an extra $264 in annual mortgage payments per $100,000 borrowed.

If you're still rate shopping, consider getting locked today. As a result of the recent shift, mortgage rates are now at a 4-month high.

Fed Minutes Edge Mortgage Rates Higher

The Federal Reserve released its September 21, 2010 meeting minutes Tuesday afternoon. Mortgage rates in California are slightly higher today.

It's unwelcome news for this season's home buyers, and existing homeowners with plans to grab lower rates. Mortgage rates made new lows last week and may have reached a turn-around point.

The "Fed Minutes" is published 8 times annually, and is the official meeting recap for the Federal Open Market Committee. Similar to the meeting minutes released after a corporate conference or condo association gathering, the Fed Minutes details the conversation and debate between meeting attendees.

Minutes are the lengthy companion to the Fed's brief, post-meeting press release.

Because of its content, the Fed Minutes is closely read by Wall Street and economists. It's insight into the talk that shapes our nation's monetary policy and, within the text, there's often clues about the Fed's next move.

Here's some of what the Fed discussed last month:

• On inflation : It's running at lower-than-optimal levels
• On housing : Post-tax credit, housing stalled in July
• On stimulus : The Fed may intervene in open markets within the next few months

 

The over-riding theme within the minutes was that the U.S. economy is growing a steady pace, albeit slower than what's optimal. The Fed is prepared to push things along if the economy slows further and news like that is helping stock markets.

Bond markets are losing. Rates are rising.

For now, mortgage rates hover near all-time lows.  If you haven't locked a mortgage rate yet, your window may be closing.  Once the economy turns around for certain, mortgage rates will be among the first of the casualties.

August's Fed Minutes Lead Mortgage Rates Higher

Home affordability took a slight hit this week after the Federal Reserve's release of its August 10 meeting minutes.

The "Fed Minutes" is a lengthy, detailed recap of a Federal Open Market Committee meeting, not unlike the minutes published after a corporate conference, or condo association gathering. The Federal Reserve publishes its meeting minutes 3 weeks after a FOMC get-together.

The minutes are lengthy, too.

At 6,181 words, August's Fed Minutes is thick with data about the economy, its current threats, and its deeper strengths. The minutes also recount the conversations that, ultimately, shape our nation's monetary policy.

It's for this reason that mortgage rates are rising. Wall Street didn't see much from the Fed that warranted otherwise.

Among the Fed's observations from its minutes:

• On the economy : The recession was deeper than previously believed
• On jobs : Private employment is expanding slowly
• On housing : The market was "quite soft" in June

Now, none of this was considered "news", per se. If anything, investors were expecting for harsher words from the Fed; a bleaker outlook for the economy. And, because they didn't get it, monies moved to stocks and mortgage bonds lost.

That caused mortgage rates to rise.

The Fed meets 8 times annually. Its next meeting is scheduled for September 21, 2010.  Until then, mortgage rates should remain low and home affordability should remain high. There will be ups-and-downs from day-to-day, but overall, the market is favorable.

The Fed's June Minutes Keep Mortgage Rates In Rally-Mode

According to Freddie Mac, mortgage rates made new all-time lows this week and the good news is that rates look poised to fall even more.

Since the Federal Reserve's release of its June 2010 meeting minutes Wednesday, mortgage rates are dipping even more and one of the main reasons why is because of some choice Fed words.

If you've never seen a Fed Minutes release, it reads academic. The document is page after page of stats, facts and figures about the U.S. economy, accompanied by an in-depth recap of the intra-Fed member debates that shape the nation's monetary policy.

At 7,333 words, the June Fed Minutes is the unabridged version of the more well-known, post-meeting press release.  The corresponding press release was just 360 words.

As it turns out, Wall Street didn't like what it read in the minutes.  Specifically:

1. The Fed expects below normal growth through 2012
2. The Fed's outlook for employment has dipped
3. Credit conditions are easing only slowly

Furthermore, the Fed said its action may be needed if the economy were "to worsen appreciably".

Overall, the economic optimism the Fed displayed earlier this year appears to be waning. The economy is moving forward -- just not as quickly as expected.  That should bode well for mortgage rates and home shopping in Corona.

Mortgage rates were down Wednesday afternoon and Thursday and remain historically low. All it would take to reverse rates, however, is a run of positive news on jobs, growth, and consumer spending.  Therefore, if you know you need to lock a mortgage rate in the near-term, it may be a good time to make the call. 

Lock your mortgage rate and move on.

The Fed's April Minutes Push Mortgage Rates Even Lower

After starting the day in the red, mortgage rates rebounded Wednesday afternoon after the Federal Reserve released its April 27-28, 2010 meeting minutes.

It's good news for home buyers and would-be refinancers in Corona.  Mortgage rates continue to troll along multi-year lows.

"Fed Minutes" are lengthy, detailed recaps of Federal Open Market Committee meetings, not unlike the minutes you'd see after a corporate conference, or condo association gathering. The Federal Reserve publishes Fed Minutes 3 weeks after each respective FOMC get-together.

The Fed meets 8 times annually.

Because of the minutes' content and density, it's of tremendous value to Wall Street and investors.  Fed Minutes provide a glimpse into the conversations and debates that shape the country's monetary policy.

The broad scope of the published meeting minutes are in sharp contrast to the more well-known, post-meeting press release which reads more like a policy summary.

And the extra words matter.

Here's some of what the Fed discussed last month:

• On Greece : A crisis in Greece could slow U.S. domestic growth
• On housing : Despite government support, growth appears to have stalled
• On its mortgage buyback program : There's little reason to sell mortgage bonds right now

When the markets saw the Fed Minutes, what had been a down day for bond markets turned positive. The less-than-sunny outlook for the near-term U.S. economy sparked bond sales, pushing prices higher.

Mortgage rates move opposite mortgage bond prices.

Wall Street is always in search of clues from inside the Fed about what's next for the economy and post-FOMC minutes usually give good fodder.  April's meeting was no different.

For now, mortgage rates remain near all-time lows but once the Eurozone issues are settled, rates are likely to rise. If you haven't locked a mortgage rate, your window may be closing.  Once the economy is turning around for certain, mortgage bonds will be among the first of the casualties.

The March Fed Minutes Explains Why Home Sales Weren't Worse This Winter

Mortgage markets improved yesterday after the Federal Reserve released its March 16, 2010 meeting minutes. It's good news for in Corona home buyers and rate shoppers -- rates could have just as easily gone the other way.

The Fed Minutes is a detailed recap of the debate and discussion that shapes the nation's monetary policy. The notes are dense; it takes 3 weeks to compile them for publication.

As compared to the more well-known, post-meeting press release, the Fed Minutes are extremely lengthy. For example:

• March 16 press release : 451 words
• March 16 meeting minutes : 6,152 words

If the press release is the executive summary, the Fed Minutes are the novel.

The extra words matter.The minutes recount what the Fed did, how the Fed did it, and what the Fed plans to do next. And, in the minutes, Wall Street looks for clues. 

This is why the report is important to every rate shopper in the country.

When the Federal Reserve publishes the minutes from its meetings, it leave clues about the groups next policy-making steps.  For example, in March's Fed Minutes, it's clear that the Fed's concern about inflation is hugely diminished and that's a major plus for the mortgage bond market.

Inflation causes mortgage rates to rise. The absence of inflation, therefore, helps them to fall.  This improves home affordability, among other things.

Similarly, the Fed Minutes note that real estate sales may have been worse throughout the winter months if not for low mortgage rates and the sense among Americans that home prices were troughing. We may infer, therefore, that rising rates may suppress home sales later this year.

Markets are always looking for clues from inside the Fed and the last meeting's minute signal that the economy is on its way up.  If you're looking for a bargain in the housing market, your window to act may be closing.