The Federal Open Market Committee met this week and surprised everyone with their announcement after the meeting. Over the last few meetings the Fed has been talking about when they would slow their quanitative easing program (QE3). Many had expected the Fed to make an annoucement about that this week, however they didn't do as expected. The Fed decided that they would continue with the current program.
Mortgage rates dropped immediately! We saw a drop of almost a .25% Wednesday afternoon. We aren't sure how long that will continue so it is a great time to talk to a lender about rates.
The Fed said the U.S. economy was expanding at a moderate pace over the past six weeks. However, the Fed did not see sufficient economic improvement to remove its existing market stimulus. The biggest surprise in the Fed's announcement was that they were not going to make any changes. They are leaving the current stimulus program alone.
The Fed offered several reasons for not making a change :
- The group is not 100% convinced that the economy can grow without QE3
- The group believes that low mortgage rates are important right now
- QE3 helps to promote inflation, which could be good for the economy, too
The Fed also mentioned that there is not preset course for the future of QE3 and that the group will continue to watch the economy for signs that the stimulus can safely end. Mortgage rates have risen since the last meeting (about a quarter of a point) and inflation has been below their 2% threshhold.
Low inflation rates promote low mortgage rates. Right now mortgage rates look great! If you were thinking about buying or refinancing, you may want to talk to your lender soon!!
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants - Email - Website
