Orange County Real Estate Update: The Fed and Home Affordability
Posted by Leslie Eskildsen on Friday, October 16th, 2009 at 5:27pm.
Orange County real estate is on the move, and it is important to know there are several factors that are included when mortgage companies set their rates. Most recently, mortgage rates are higher after the Federal Reserve released the internal notes of its September 22-23, 2009 meeting.
Known as the "Fed Minutes", the report details the conversation and cross-currents that led to the Federal Reserve's decision to vote "unchanged" on the Fed Funds Rate after its last meeting.
The Fed Minutes are the lengthy companion to the more famous, succinct post-meeting press release.
As a comparison:
- Press Release: 383 words
- Minutes: 6934 words
The extra level of details is a big deal because Wall Street is perpetually in search of clues about what the Federal Reserve is going to do next.
In the past week, multiple Federal Reserve members hinted that the Fed Funds Rate may rise as early as April 2010. Fed Chairman Ben Bernanke even alluded to it, too.
The minutes revealed that the economy may improve even faster than was previously expected, too.
These acknowledgements are part of the reason why mortgage rates are up. Because the Fed Funds Rate rises to accommodate a growing economy, the prospect of economic recovery is drawing money into the stock market and away from mortgage-backed bonds.
Less demand for bonds means lower prices which, in turn, leads to higher rates.
Rates are still at near historic lows, so if you are in the market for a new home, you can search for Orange County Real Estate and feel free to contact me if you come across a property that interests you.
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