FHA Interest Rates Respond to Fed Meeting

The Fed’s Open Market Committed left rates unchanged.  The 9-1 vote leaves the Fed Funds Rate at 0.000-0.250%.

In its press release, the highlights were three-fold:

1. Economy:  “has continued to strengthen”
2. Jobs Market:  “is stabilizing”
3. Business Spending: “has risen significantly”.

This is six meetings in a row with an optimistic outlook.  The 2008-2009 recession is slowly going away and the economy is growing.  It’s not perfect and the economy still has threats:

1. High unemployment threatens consumer spending
2. Housing starts are at a “depressed level”
3. Consumer credit remains tight

The overall tone was positive inflation is within limits.  We don’t have another Fed meeting until April 27-28.

FHA interest rates responded positively to the news and we avoided a massive sell-off that would have pushed loan rates higher.

The next big looming threat is the end of the $1.25 trillion commitment to the mortgage market by March 31, 2010. Fed insiders estimate that the bond-buying program lowered mortgage rates by 1 percent since its start.