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The Federal Open Market Committee meets today for the last time in 2009. It's a 2-day meeting and the Fed is expected to leave the Fed Funds Rate near 0.000 percent.
But that doesn't mean mortgage rates won't change. This is a simple (I hope) explanation of how this system works.
See, a major misperception among the public is that the Federal Reserve sets mortgage rates. That's false. Mortgage rates are based on the price of mortgage-backed bonds.
As an example, since 2000, the Fed Funds Rate and the 30-year fixed rate mortgage have been within 1 percent of each other at times, and as far apart as 5 percent at others.
If there was a direct relationship between the two, such a spread would be impossible.
The Federal Reserve doesn't set mortgage rates. Wall Street does. However, whenever the Fed adjourns from its meetings, mortgage rates are susceptible to change.
For home buyers and rate shoppers, this week's Fed meeting takes on added significance.
Over the last half-year, the Fed has used its post-meeting press releases to acknowledge an improving economy in which growth is tempered by job loss and tepid spending. In November, though, net job gains nearly went positive and Retail Sales data proved strong.
If the Fed gets more positive in its message tomorrow, mortgage rates will suffer. This is because Wall Street will use the Fed's position on the economy as a reason to buy stocks. Some of the cash to fuel those buys will come from the mortgage bond market.
As extra bond supply hits Wall Street, mortgage rates go up.
Similarly, if the Fed's message goes negative on the economy, investors are expected to sell their stock positions in favor of buying bonds. This makes rates go down.
So, the Federal Reserve doesn't make mortgage rates, but it does exert an influence on them. In other words, rate shoppers would be wise to watch for the FOMC's 2:15 PM adjournment. Even though the Fed Funds Rate is expected to remain unchanged, mortgage rates certainly are not.
The Gary McNinch Team home website is www.RentonHomeFinder.com Please tweet us, text us, or send us a snail mail. We like to hear from our many satisfied clients.
In this day of environmentally friendly movement or "Green" everything, this aircraft is top of the list. Due to the composite structure it weighs much less than any other commercial airplane. In fact it should get 20% better fuel mileage. Fuel mileage is huge to airlines, because of the major cost of fuel. So besides being more enviromentally than other aircraft, it will save the airlines huge dollars per flight. Now, I don't want to be cynical, but it is the $$$$$$$$$$$$ cost savings that will drive the sales of this aircraft. There are 870 presales and will be more soon.
Boeing has been and remains to be a major economic force in Renton and the Puget Sound region around Seattle. The 787 Dreamliner is not only good for the environment and the local economy but it will mean steady employment and great quality of life (including wonderful family homes) for the people who build and support this aircraft. And quality of life is the most important feature of this new aircraft.
Congrats Boeing Aircraft and every person with a mouse click, hand or tool that build this state of the art aircraft and who stand proud today! Lots of my friends are smiling hugely today.The Gary McNinch Team home website is www.RentonHomeFinder.com
My twitter handle @RentonHomeFinde
Our facebook page is Gary McNinch on Facebook
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Gary McNinch Team Realtor Renton WA Real Estate Keller Williams Realty Renton WA. Call us 206-696-2329, email Gary@GaryMcNinch.com Serving Renton, Kent, Auburn, Newcastle, Skyway, Fairwood, Renton Highlands and Kennydale.
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A Simple Explanation Of The Federal Reserve Statement (September 23, 2009 Edition)
It also reiterated plans to support the mortgage market to the tune of $1.5 trillion.
In its press release, the FOMC noted that the U.S. economy is "picking up following its severe downturn" and that financial markets have "improved further".
It's the second consecutive post-FOMC statement in which the Fed appears somewhat optimistic -- a signal that the recession will end soon, or has already ended.
That said, the economy still has some soft spots and the Fed made a point to single them out. Each poses a distinct threat to economic recovery.
Also in its statement, the Fed confirmed its plan to hold the Fed Funds Rate near zero percent "for an extended period" and to honor its $1.25 trillion commitment to the mortgage bond market.
However, the FOMC changed its timeframe on the mortgage-backed bond buys, extending its deadline to March 2010. This move should help the Fed keep mortgage rates from rising too high as the economic expansion takes hold.
Market reaction to the Fed's press release is positive. After an early day sell-off that drove rates higher by about a quarter-percent, most of the pressure is easing. Pricing is worse on the day overall, but well off its lows.
The Gary McNinch Team home website is www.RentonHomeFinder.com My twitter handle @RentonHomeFinde Our facebook page is Gary McNinch on Facebook My Active Rain website is Gary McNinch Team on ActiveRain Gary McNinch Team Realtor Renton WA Real Estate Keller Williams Realty Renton WA. Call us 206-696-2329, email Gary@GaryMcNinch.com Serving Renton, Kent, Auburn, Newcastle, Skyway, Fairwood, Renton Highlands and Kennydale.
Please tweet us, text us, or send us a snail mail. We like to hear from our many satisfied clients.
Oh and PS .. The FOMC's next scheduled meeting is November 3-4, 2009.
City of Renton just opened the Cedar River Off Leash Dog Park. I was looking at homes in Fairwood the other day and swung by to take a look. Nicely done.Kudos to the city and the RUFF (Renton Unleashed Furry Friends) volunteers who raised money and worked on this project.
And sometimes it' s important to remember that some people love their dogs more than their kids.Here's a link to the Renton Reporter article. Renton dog park opens with a bark
Whether you are buying a Renton home mostly for you or mostly for your pets we are glad to help.
The Gary McNinch Team home website is www.RentonHomeFinder.com My twitter handle @RentonHomeFinde Our facebook page is Gary McNinch on Facebook My Active Rain website is Gary McNinch Team on ActiveRain Gary McNinch Team Realtor Renton WA Real Estate Keller Williams Realty Renton WA. Call us 206-696-2329, email Gary@GaryMcNinch.com Serving Renton, Kent, Auburn, Newcastle, Skyway, Fairwood, Renton Highlands and Kennydale.
Please tweet us, text us, or send us a snail mail. We like to hear from our many satisfied clients.
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Renton Realtor that specializes in Renton Wa Real Estate and educates buyers and sellers of homes and condos in Renton, Talbot Hill, Fairwood, Newcastle, Skyway, Renton Highlands, Kent and Kennydale.
The McNinch Team is Amazing or "Awesome" as my grandson says. We enjoy each other's company, our clients and getting the very best for everyone. To read more about us please go to our Team website www.RentonHomeFinder.com and it talks about all of us.
Please call us at 206-696-2329 or email Gary@GaryMcNinch.com if you have any questions. Our goal is to build long lasting relationships with our clients (old and new) and now our business is about 75% referral from Satisfied Customers. And please check out or 100% Satisfaction Guarantee. Giving you the best service in Renton WA Real Estate.
This means "What are we good at?".
Well first off, we follow the Keller Williams Values, they are called the WI4C2TS.
Second, we believe that the buying and selling of a home or condo is usually the "most important financial decision" that a perso
n or family will make. With our experience, passion and continuous updated market knowledge and education, we provide solid information for our Satisfied Clients to make these decisions.
Thirdly, we know that our business is everchanging. Through the great training of Keller Williams University, Mega Agent Training, Business Planning, MREA classes, we strive to stay ahead of and manage those changes to serve you.
Finally, None of the Above matters unless, we give you great service. When you buy or sell a home, condo, townhome, land, rental or investment in Renton, Talbot Hill, Skyway, Cascade, Fairwood, Downtown Renton, Renton Highlands, Kennydale, Newcastle or Kent we have the experience to assist and guide you with locating, offering, negotiating, listing, staging, financing, inspecting and closing.
Please click here for words from our Satisfied Customers. When buying, selling, trading or dreaming about your next home in Renton, be assured when it is time to go to work, the Gary McNinch Team will go to work for you. 100% Satisfaction Guarantee or we return our share of the Realtor fee, no other Realtor will do that!
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