Fed Leaves Interest Rates Unchanged… And…

A divided Federal Reserve held the line on interest rates Wednesday and indicated formally that no cuts are coming in 2019. The decision came amid divisions over what is ahead and still leaves open the possibility that policy loosening could happen before the end of the year depending on how conditions unfold.

The central bank predicts one or two rate cuts in its set of economic predictions, but not until 2020. Despite cautious wording in the post-meeting statement Wednesday, markets are still betting the Fed cuts, as soon as July.

These statements and what has been going on in the Whitehouse has caused the Bond and Treasury markets to rally hitting 2 year lows.  As a result, mortgage rates are hitting new lows everyday.  We are seeing the 30 year fixed rate at 3.75% with 0 points.  A rate we have not seen since 2017!

The U.S. central bank voted Wednesday to maintain its benchmark interest rate in a range of 2.25 percent and 2.5 percent, a move that many anticipated despite growing calls for the Fed to cut. But eight out of 17 officials penciled in rate reductions by the end of this year, which would be the first such adjustment since the economy plummeted into the depths of the Great Recession.

Language in Fed Chair Powell’s dictates the markets

The committee changed language from its May statement to indicate that economic activity is “rising at a moderate rate,” a downgrade from “solid.”

In their baseline scenario, FOMC members said they still expect “sustained expansion of economic activity” and a move toward 2% inflation but realize that “uncertainties about this outlook have increased.”

“In light of these uncertainties and muted inflation pressures, the Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective,” the statement said. The “act as appropriate to sustain the expansion” language mirrors a statement from Powell in early June.

These may seem very subtle to most, but the slight change of “Moderate” to “Solid” speaks volumes to Wall Street. Wall Street is betting on future rate cuts and the markets are reacting positively!

Mortgage Rates Continue to Drop!

With the recent news of the Feds today, mortgage rates continue the rally.  The 30 year fixed rate with 0 points 3.75% based on a 740 credit score on a single family home with 25% equity. For more details about rates and terms, call or email me anytime!

Bill Nickerson NMLS #4194 | Bill’s Email | 978-.273.3227

6 Things to Know About Credit Scores

By Jessica L. Anderson | Kiplinger – Thu, Jul 12, 2012

FICO isn’t the only number in town. The score that counts is the one your lender uses.

1. There is no single number. The compilers of the widely accepted FICO credit score allow lenders to customize their system, so different lenders produce different scores. Plus, each of the credit bureaus—Experian, Equifax and TransUnion—has a proprietary scoring model. As if that weren’t enough, the credit bureaus together invented VantageScore a few years ago to compete with FICO.

2. Different scales, different scores. FICO scores range from 300 to 850. You’ll need about 760 or better for the best mortgage rates, but a score of 720 should be sufficient to get you the best deal on an auto loan. About 10% of lenders now use VantageScore, which ranges from 501 to 990 and has corresponding letter grades from A to F. The best rates go to borrowers with scores in the A range (above 900). If you are denied a loan or given less than the best rate, a lender must tell you the score it used, along with the corresponding range and factors that adversely affected your score.

3. Do a credit checkup. You can monitor your credit yourself by requesting a free report once a year from each of the credit bureaus through http://www.annualcreditreport.com. But the free report won’t include your credit score; you’ll pay about $8 to get the credit bureau’s proprietary number. The majority of lenders (especially mortgage lenders) use FICO scores, however, so if you’re in the market for a loan, that is the one you want. At http://www.myfico.com, you can get your credit report and a FICO score from Equifax or TransUnion (but not Experian) for $20.

4. Free doesn’t always mean free. If you are just looking for a ballpark estimate of how you’re doing, go to http://www.credit.com. You’ll get free estimates of your FICO score and VantageScore along with Experian’s own PLUS score. Sites such as http://www.freecreditscore.com and http://www.creditreport.com, however, will give you a free PLUS score, but only if you sign up for a free trial subscription to a credit-monitoring service; if you don’t cancel in seven days, the service costs $15 to $20 a month. Likewise, at MyFICO.com, you can get your FICO score free, but only if you accept a trial subscription to the com­pany’s Score Watch system.

5. Maintain credit health. All of the scores measure the same factors from the information in your credit file, and they all indicate the same thing: creditworthiness. Try to keep your credit-utilization ratio low—that is, be aware of the amount of debt you have compared with the amount of available credit you have. A history of paying your bills on time helps. Having a variety of loans—for example, a revolving line of credit (such as a credit card), a car payment and a mortgage—will boost your score, too.

6. It’s a moving target. The information in your credit files at the bureaus is continually changing—and so will your score. If you’re about to apply for a loan, check your reports for mistakes that could impact your score.  Pay down balances as much as possible. And if you’re not applying for a credit card or making a big-ticket purchase anytime soon, says Jason Alderman, a senior director at Visa, “it doesn’t matter what your score is tomorrow.”

This is great general information about FICO scores.  For more information about your credit score and how it affects your financing a home, please contact me either by email or phone.

Bill Nickerson NMLS #4194

Merrimack Mortgage Company  179 Great Road Acton MA 01720