A Simple Explanation Of The Federal Reserve Statement for Colorado Homebuyers- 2010

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Mortgage and Lending with First Time Home Buyer, Mortgage Rates, Pre-Approval NMLS 243370

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Putting the FOMC statement in plain EnglishThe Federal Open Market Committee voted to leave the Fed Funds Rate within its target range of 0.000-0.250 percent.

In its press release, the FOMC noted that the U.S. economy “has continued to strengthen”, that the jobs markets is getting better, and that financial markets are supportive of growth.

There was no mention of the housing market's strength.  The last 3 statements from the Fed included that specific verbiage.

It’s the fifth straight statement in which the Fed spoke about the economy with optimism.  This should signal to markets that 2008-2009 recession is over and that economic growth is returning to U.S. economy.

The economy isn’t without threats, however, and the Fed identified several in its press release, including:

  1. Credit remains tight for consumers
  2. Businesses are reluctant to hire new workers
  3. Housing wealth is down

The message’s overall tone, however, remained positive and inflation appears is still within tolerance.

Also in its statement, the Fed confirmed its plan to hold the Fed Funds Rate near zero percent “for an extended period” and to wind down its $1.25 trillion commitment to the mortgage market by March 31, 2010.  This is noteworthy because Fed insiders estimate that the bond-buying program suppressed mortgage rates by 1 percent through 2009.

the Colorado Mortgage market reaction to the Fed press release is, in general, negative. Mortgage rates in Denver are rising this afternoon.

The FOMC’s next scheduled meeting is March 16, 2010.

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Thank you,


Ben Yost
Senior Loan Consultant

NMLS#   243370  LMB#  100023031

New American Funding
5299 DTC Blvd. Suite 300

Greenwood Village, CO 80111

 

Cell:     303.587.4297

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