Fed Rate Remains Unchanged
Wrapping up this months Fed meeting, the central bank has decided to maintain the Fed funds rate at it's current target level of 0-.25%. Mortgage rates are benefitting from the news, stocks are nearly unchanged, and now we've got another window of time before uncertainty about the direction of rates comes into the news again.
While improved mortgage rates would be a good thing, the Fed's actions today indicate that the economy is not as rosy as things may seem. It also indicates that rates are no longer subject to our economic conditions - we are truly subject to the terms of a global economy. Our inflation is healthy, the job market has improved (on paper, anyway), and many economic indicators are just fine. Exports, though? Not so much. Economic conditions around the world played a very large role in today's decision by the Fed.
I'm not sure how much of a break we'll get before the next round of Fed rate hike paranoia, but it could come down to the weather. The past 2 brutal winters really put a dent in economic productivity, and if another one rolls around, the Fed likely won't want to combine a seasonal slowdown with a rate hike - that combination could easily sink us back into recession. The next Fed meeting that is accompanied by a public conference is December, right before the winter gets tough. If things drastically improve domestically and abroad, we could see a rate hike then, but if not, we may be in the clear until Spring time, at least.
It'll be interesting to keep an eye on the world's major economies over the next few months - we've already seen what a large disruption thousands of miles away could mean for our own markets, as evidenced by the recent issues with China that caused our markets to flounder. Many markets around the world are on very shaky ground, so whether or not rate hikes are on the way is up for debate, but 2 other things are not -- for one, the Fed WANTS to raise rates and feels they NEED to raise rates for a long term healthy economy. And two, as things improve, mortgage rates will improve, too, but for investors, not consumers. Higher mortgage rates are on the way - we saw a spike in rates just this week on the small risk of a Fed rate increase. Mortgage rates improved immediately following today's decision. When it comes to the Fed raising their target funds rate, and when it comes to mortgage rates, it's not a matter of if, but when, they'll be heading up.
The best time to buy a home was a couple of years ago when values and rates were at their best. It's still an amazing time to buy with rates near the bottom and home values in many markets still modest. In the future, as values and rates both increase, there will be a lot of people talking about "couldv'e, should've, and would've" when it comes to buying real estate.