How will the higher Mortgage Rates affect your Buying Power?

We have been spoiled with mortgage rates over the last few years  as we saw the the 30 Year Fixed Rate get to the 2.50% range.  As we move forward in 2022, mortgage rates have already started to climb.  Rates are in the 4.00% to 4.25% range and we now have to adjust our purchasing power. Each half of a percent (.50%) in mortgage rate equates to about $25,000 of buying power. Depending upon when you were “Pre-Approved” for a mortgage, the new rates may greatly affect the home you now qualify for.

What should you do? Call your Lender or Bank and have your “Pre-Approval” updated to reflect the current mortgage rate of today.  This will bring your purchase price and loan amount down as these higher rates will increase the overall cost of your mortgage payment.

Why is this happening?  When the Fed raises the federal funds target rate, the goal is to increase the cost of credit throughout the economy. Higher interest rates make loans more expensive for both businesses and consumers, and everyone ends up spending more on interest payments.

Those who can’t or don’t want to afford the higher payments postpone projects that involve financing. It simultaneously encourages people to save money to earn higher interest payments. This reduces the supply of money in circulation, which tends to lower inflation and moderate economic activity—a.k.a. cool off the economy.

 Click here to learn more about mortgage rates

Economists have been warning us for the last few years, mortgage rates have to go up!  The longer you wait, the more it will cost to buy a home. Or another way to look at this, you buying power could drop by 10% or more for each 1% increase in mortgage rate.  Buy now while the mortgage rates are still low as we may not see these rates again in our lifetime!!

For more information on Mortgage Rates and Programs, feel free to call or email me anytime.

(C) 978-273-3227 or Bill’s Email 

Senior Loan Officer | NMLS #4194 | bill.nickerson@flagstar.com

So Why Do Mortgage Rates Change So Much?

Have you ever called a mortgage company and received a quote and then called back the next day and the same rate was no longer available??

Mortgage companies, Banks and Credit Unions are subject to potential daily and even hourly shifts in the market. Interest rates fluctuate on the simple principal of supply and demand.   

Mortgage rates trade based on Mortgage Back Securities and The Bond Markets as well as the overall economy.  The vehicles that mortgage rates are based on are considered very conservative, stable and tend not to have the wild swings that one would find in the Stock Market.  If the Stock market begins to see large increases or decreases, Investors will shift Billions of dollars in and out of the Stock Market and move them in to the Mortgage Markets.  This will cause mortgage rates to either rise or fall.  Stock Market tanks, good news for Mortgage Rates, Stock Market rallies and rates suffer.   Investors and Traders will constantly shift funds out of the riskier stocks into the safe haven of the mortgage markets.  These shifts can occur as little as once a day or in some cases can happen multiple times during a trading day. Thus causing mortgage rates to possibly change multiple times in a day.

These markets are affected globally as well; so even after the markets are closed in US, whatever is happening in Europe, Asia and around the world will cause our markets to move one way or the other.

What drives interest rates (click here for quick facts)

Here are some of the variables that are being watched in today’s market:

• Covid-19 – Global Pandemic
• Ukraine
• Europe and Asia’s Economy
• Comments by the President
• Politics
• The US Housing Market
• Unemployment in our Country
• The Price of Oil and Gas
• The “Feds” decision to move short term interest rates
• The overall health of the US Economy

Any of these items can trigger a rally one way or another.  Even a simple comment at a breakfast meeting by the President, the Fed Chairman or someone in power is enough to influence the markets.

Additional Mortgage Rate and Index Information:

To help us understand why mortgage rates change, it is important to realize that there is not one interest rate, but multiple ones. Below are some of the most prevalent interest rates and indexes that also have an impact on mortgage rates:

Prime rate – This rate is often offered to a bank’s best customers. If you are shopping for a home equity line of credit, then it is important to familiarize yourself with the prime rate. HELOCs are typically based upon the prime rate -plus or minus a certain percentage.

LIBOR – Stands for London Inter-bank Offered Rates. Libor rates are based upon the rates that a select group of London Banks offer each other for inter-bank deposits. Many adjustable rate mortgage programs use the Libor index.

Treasury bill rates ”T-bills” and Treasury Notes – These are short-term and intermediate debt instruments used by our Government to finance their debt. The treasury index is based upon the auctions of U.S. Treasury bills or on the Treasury’s yield curve. Like the LIBOR index, the U.S. Treasury index is a popular index for adjustable rate mortgage products. Also, the Twelve Month Treasury Average (12 Month MTA) is a popular index which is based upon the twelve month average of the monthly yields of U.S. Treasury securities (maturing in one year). The MTA is a popular choice for option arm mortgage programs.

Treasury Bonds – Unlike T-bills and Treasury Notes, treasury bonds are long-debt instruments. These bonds are used by the U.S. Government to finance its debt.

Cost of Savings Index – often referred to as the COSI index. This index is based upon the annual average of interest rates on World Savings deposit accounts. The average is pulled on the last day of each month.

11th District Cost of Funds – Often referred to as the COFI index – The COFI index is based upon the average of the borrowing cost to member banks of the Home Loan Bank of San Francisco of the 11th District. Unless you are shopping for an option arm mortgage, it is unlikely that your loan will be affected by this rate.

Certificates of Deposit Index – Often referred to as the CODI index – this index is arrived at by calculating the average of the past twelve months rates of 3 month CD rates.

Federal Funds Rate – The fed funds target rate is the rate which federally chartered banking institutions lend balances to other depository banks overnight.

This is a lot of information to weigh each day when calculating mortgage rates.  In general, most Banks, Investors, Lenders etc. will set rates around 10:30am once most of the morning economic reports have been released and the markets have had time to react to the information.  In a calm trading day on Wall Street, these rates would be good for that day.  In a day where lots of Economic reports and World events are occurring, these rates can be reset a few times as the Markets fluctuate.  It is important to call your lender or bank often to check on these rates as they can and will change.  It also important not to follow online rate sites that may be posting Average Rates as this information can be old as well a different Financial Picture then you may have.  The Freddie Mac rates are based on closed loans from last week and an average of .7 Points of fees in the rate. This may give you a range, but not accurate enough to base your mortgage payment on or what is happening today in the markets.

Bill Nickerson has been in the Mortgage industry since 1991. Please leave a comment, email or call me anytime with questions you may have about mortgage programs, rates and to get approved for a mortgage.

   NMLS# 4194  www.billnickerson.com  978-273-3227

Bill Nickerson

Proactive Buyers help escrow close on time!

Maybe it’s not the most fascinating topic of the day. If you’re buying a home, however, and that “time is of the essence” phrase on the purchase agreement is really applied, how easily and quickly your escrow closes is indeed the kind of thing that can keep you up at night. No one likes a long, drawn-out closing process if it can be avoided. So let’s look at what YOU and all parties can do to make this closing thing a piece of cake.

Unless your purchase is a cash transaction, the typical agreement calls for a 30 to 45 day close in which buyers, sellers, and vendors are working tirelessly to execute the terms of the purchase. The reason so many buyer agents put an escrow or transaction coordinator (TC) in charge of this process is simple — having one person there to keep everyone on track is more than a luxury. If closing is to take place on time, it’s a necessity. Once a purchase price is agreed to, and your earnest money deposit has been deposited in the escrow account, the TC will become your best friend. If you make him or her happy, you’re halfway there.

The first thing many agents and homebuilder reps do is to have you and the seller fill out a contact sheet. This sounds like a ridiculously simple task, and it is. But its importance should not be minimized. With all contact info of all parties, escrow is then able to proactively reach out and communicate to everyone and begin gathering all the necessary paperwork and information. This includes information on not only buyer and seller, but also their lenders (if the home is paid off, happy day…). The title company to be used is also listed, plus anyone else vital to the transaction closing.

Of course, the purchase agreement needs to be buttoned up with all the necessary signatures, and escrow will need to contact any homeowner associations (if they exist) that need to be made privy to the transaction. Yes. This part is important. Ask any agent around, and they will tell you that escrow is often not made aware when there is a 2nd HOA, leading to closing delays. The more complete the information is upfront, the better the process will be. In fact, it’s wise to ask your agent for a “road map” for how closing works so that you can gaze at it as each step is completed. It may help you stay sane.

Just because you’re in escrow doesn’t mean it’s time to take that much-needed vacation. There will be time for that after the close of escrow, even if it took you many months traipsing through hundreds of houses to find this one. Finding parties to the agreement for vital information is ten times more difficult when they are floating in a pool somewhere on a tropical island. When escrow calls and emails with a request, jump. You heard that right. The quicker you respond, the more time and energy is saved. Check voicemail, texts, and email regularly during this 30-day process and respond promptly to all vendor requests to ensure an on-time close.

And don’t be afraid to ask questions through the process. Typically, the person in charge of your escrow will move quickly through a lot of their checklist, but they are never too busy to answer questions and explain how and what the documents mean. Escrow also appreciates clear communication on any special requests. Can’t be there for the close and prefer to sign documents in the office with a notary, e-sign on your phone or computer, or have a mobile notary visit your home to sign? These are arrangements that need to be put in place long before the closing date. And if there are other parties to the transaction (like co-signers) the same applies to them.

The lender and escrow will inevitably need to rely on each other for accurate and timely disclosure of all fees, so introduce them right away. The sooner they become household words to one another, the quicker the documents can be produced accurately and made available for review. This shortens wait times and helps avoid unnecessary delays when the deal comes closer to final loan documents, which will begin being referred to as “docs” — not of the medical variety.

Home inspections and final loan approval (any and all conditions placed on your approval must be removed) must be satisfied and signed off on before that magic day happens. So, if you’re in doubt that you are not doing all you can, call your lender, the TC, and even the escrow company to ensure that you are doing all you can to make this happen on time. Be the squeaky wheel, even though you may feel you are surrounded by all manner of experts who reassure you everything is fine. They may have dozens of transactions to be concerned about. You only have one.

Source: TBWS

Training for the Pan Mass Challenge

Bill Nickerson | NMLS #4194 | 978.273.3227 | Bill@billnickerson.com

 

If you can afford to Rent, Then you can afford to Buy!

If You Can Afford to Rent…Then You Can Probably Afford to Own.

Interest rates are near historic lows. Purchasing power has increased, and the cost of renting in many areas is now greater than the cost to buy. Some say mortgage loans are impossible to obtain without perfect credit and 20% down. Want the truth? Read on, and we’ll cite the three basic factors for qualifying for a home loan. 

Income – If you have a job or steady source of income, you’re off to a great start. If you’re already able to pay your rent on time each month, this could actually be easier than you might think. 

Assets – You rarely need a 20% down payment. In reality, many programs will work with 5%, 3.5% or 3%, and in some cases, even 0% down. As well, closing costs can sometimes be paid by lenders, sellers or come from gifts or grants. So if you think you’re out of luck just because you don’t have tons of cash, no worries. Chances are still good there’s a solution that may work.

Credit – Your credit is likely in good shape if you pay your bills on time and have avoided major issues like bankruptcy, foreclosure, short sales and judgments. Requirements will always vary, but there can still be reasonably flexible loan options, such as the FHA and Fannie Mae which both allow for low credit scores.

 That’s it. These three items are the fundamentals of mortgage lending. Exceptions will exist, but don’t be fooled into thinking the process is impossible. For those who work and pay their bills, there may not be a whole lot standing in the way of homeownership.

 I would like the oppurtunity to consult with you and start you on the path of Homeownership.  Whether it be for Today or planning for Tomorrow!

           Bill Nickerson NMLS #4194  | 978.273.3227  | Email | Website

Take the emotion out of buying a home using good business sense

There is a good deal of emotion wrapped up in buying a home. Determining where we will spend the most intimate as well as memorable moments of our lives is no small decision. And it is no doubt one of the biggest investments most of us will ever make.

Removing emotion is no easy task. But if we make an attempt to screw our heads on as investors and looked at buying home the way we might buy a stock or mutual fund, education is the key — asking what considerations are necessary in order to have a knowledge base before acting.

If you’ve been a renter, you know there are advantages to it as well as freedom. But what about the future, and permanency? The idea of buying goes beyond renting, since you are pouring your money into a single bucket all your own — not someone else’s. Even before that final mortgage payment is made, you will have been living in your investment as physical shelter, which is why buying a home is still considered one of the safest investments around. It’s not just a piece of paper, an account number or a line on a graph.

Look at this as a business proposition first and foremost by scrutinizing the proximity and access to basic services regarding health, supply, security, and transport. That house way up on a hill may make your heart flutter, but if minimum requirements such as electricity and gas systems, lighting, waste collection, and sewer services are a concern, your little slice of heaven can soon turn into a nightmare. It’s also a good idea to inquire about infrastructural projects in the area that have the potential to increase or decrease the value of the property. Can that golf course eventually get sold to developers for more housing? Will those abandoned railroad tracks get used for future transit? Either you or your Realtor can visit the local city planning offices and pose these questions or just take a look at plans for the area.

What about your personal needs? Will local regulations or the governing entity of the neighborhood allow you to build on to the existing structure or renovate the exterior? Speaking of exteriors, building materials are not meant to last forever. Whether the home you are considering is stucco or siding, think about painting and repairs down the road. If most of the interior is carpeted, what kinds of expenses would you be subject to when you replace it all with hardwood?

It’s always recommended that you accompany the individual doing the physical inspection of the house you are considering. Try out the water pressure, check the electric meter and boards, and hold your hand up to the AC vents. If a breaker trips in the middle of the night in a snowstorm, where will you have to traipse to re-set it? This is also when you can educate yourself as to the structural system of the house, including how to access some areas you don’t need on a daily basis. Your home becomes a living, breathing entity when you think of it as a vessel that needs care, maintenance, and an occasional face-lift.

Even though a home can be staged for sale beautifully with furniture and accessories, it’s important to visually remove the temporary fluff and consider whether your own furniture will fit if you don’t intend to buy all new items. A few overstuffed chairs facing a fireplace do not equal a family of four facing a big screen TV over that same fireplace. How much room would be left over for an adequately sized sofa or sectional? And when looking at bedroom space, has the stager used mostly twin beds in secondary bedrooms? Can you turn around in the laundry room when someone opens the door to the garage?

While a home’s listing should give you most of the financial information you’ll need, it may not tell it all. The costs of things like homeowners association fees (if any) should be a concern — how well is the association managed, are there any liens or lawsuits pending against it, how often has the fee gone up and what does it cover? Does the neighborhood have supplemental taxes levied against it for expenses normal property taxes don’t cover, such as lighting and landscape corridors? Some of these extra taxes last up to 25 years from the time a home is built, and not all are write-offs on taxes.

Of course, your knowledge of the market surrounding the house you are considering is key as well. What homes have sold recently, what was included in the price and how long did they take to sell? How does this house compare to any of them, and why might it be worth more or less? It may seem like overreach, but ringing a few doorbells in the surrounding neighborhood and asking a few questions is not a bad idea when you are considering such a large investment.

And lastly, know your rights as a consumer buying real estate, whether you have professional representation or not. Read up about them online or buy a few books so that you are at least armed with a slew of questions. You’ll be glad you did a little prep work, took some of the emotion out of the equation, and looked at this as an important personal business investment.

Source: TBWS

Bill Nickerson NMLS #4194

5 Indicators of Where the Market’s Headed

5 Leading Indicators to Gauge Where
The Real Estate Market Is Heading

There are several key indicators that may predict what to expect in the weeks and months ahead. Instead of relying solely on the more sluggish statistics of home sales and pending contracts, knowing the following info will give you a much clearer perspective on the market.   

In total, there are five leading economic indicators:

#1: New listings available – On the supply side of things, signs of improvement are on the horizon.

In April, Redfin reported there was a staggering year-over-year decline in new listings of just over 50%. Now, however, both Redfin and Realtor.com have shared data from mid-May showing that annual stat has already shrunk to around 30%.

#2: Demand for homes – It’s no secret the real estate market relies heavily on supply and demand.

Thanks to states slowly opening back up for business, CNBC reported buyers have been “coming out in force,” wearing their masks for showings and ready to buy sooner than anticipated. Even in the first week of May, Redfin had noted its agents were experiencing demand that was 5.5% higher than even 2020’s pre-pandemic numbers. And just last week, mortgage applications rose 6% from the week before. Demand has also been fueled by the fact mortgage rates remain generously low, and many agents are doubling-down on using tech to show homes and close deals as needed.

#3: How long houses are sitting – As past trends would show, the longer a house takes to move, the more likely it may sell for less than its asking price.

Some sellers may find themselves waiting a bit longer to close a deal, as  Realtor.com recently found properties in the 99 largest metros across the country have been on the market for an average of 13 extra days, compared to a year ago. And even though buyers have been coming back out of the woodwork, there’s still a decent amount of would-be homeowners waiting until it feels a little safer to make the commitment.  The National Association of Realtors (NAR) did a survey where 40% of agents said their clients put their purchasing on pause for “a couple of months.

#4: Pricing – Although recent data has shown home prices are still 1.4% higher than a year ago,

Zillow has forecasted an overall dip of 2-3% by the end of 2020. While this may not be the news some people want to hear, to put this in perspective, we survived a much larger dip when the Great Recession dented home prices just over 27%. Plus, this is just one perspective. Fannie Mae has forecasted that the average existing-home price in 2020 will be $283,000, which is an overall growth of 4% compared to 2019.

#5: Job markets / unemployment rates

As with any other part of the economy, employment and financial stability influence the real estate market. As noted before, a decent segment of agents have reported their clients hitting the pause button on their home searches for a couple months. When it comes to those looking to sell, it really comes down to their personal situations. Some may want to stay put to avoid struggling to find their next abode, others may need the cash and/or want to shed having a monthly mortgage payment lingering over their head.

The market is still active. Your clients don’t have to sit on the sidelines while rates are at all-time lows. Contact me today to see how we can work together to help your clients match with a mortgage that meets their current needs, while supporting their goals for the future.

Bill Nickerson | Senior Loan Advisor | Flagstar Bank | Email | Bill’s Website

1500 District Avenue, Burlington MA | NMLS #4194

Can you answer Yes to any of these questions??

If you or someone you know can answer Yes to any of these questions, we should talk!!

• Paying PMI (private mortgage insurance)
• Have an Adjustable Rate Mortgage
• Credit Card Balances over $10,000
• Need cash for renovations to your home
• Have a First and Second mortgage to combine
• Your Home Equity Line of Credit keeps going up?
• Simply lower your rate and payment
• Reduce your term to a 20, 15 or 10 year mortgage
• Finance your Child’s College Education
• Is your your 30 Year Fixed Rate mortgage over 4.00%?
• Is your your 15 Year Fixed Rate mortgage over 3.50%?

These are just some of the reasons it may be time to refinance your home and create cash-flow monthly.  It’s not just about interest rate anymore, it’s about cash-flow!  Creating wealth by increasing your monthly cash-flow.

Will you create a positive monthly cash flow each month?

The longer you have the new loan, the more the savings add up. A $1,200 per year savings could grow to tens of thousands over the life of the loan. If you apply your monthly savings to your principal, you will save even more on interest and own your home sooner.

Bottom Line: If it saves you money  by lowering your rate,  lowering your term or consolidating debts to create cash flow to improve your financial situation, then it is worth looking in to.  If it allows you to create more space in your home, update or renovate, invest in a second home, or even cover the costs of College or a Wedding, then its worth looking into.  Everyone’s loan balance is different, credit score, income and the amount of money borrowed.  So your situation will be different from others.  You owe it to yourself and your family to create your own wealth.

I am always happy to go over real numbers specific to your situation. Reach out anytime and we can see what advantages might be available for you and your family.  

Feel free to call me on my cell at 978.273.3227 or Email

Bill Nickerson NMLS #4194

Does it make sense to waive a Home Inspection to strengthen an offer?

Okay. It may sound bureaucratic and boring. But there are a number of precautionary contractual conditions for any purchase agreement recommended by the Realtor community that protects homebuyers from liability as well as poor decision-making. And no matter how competitive the bidding for a home, they’ll advise you to include them. One of them is a home inspection.

Even though your Realtor will urge you NOT to waive that contingency and even make you sign a form disclosing they made that recommendation, however, many buyers will still plow ahead and waive the inspection in an effort to make their offers the strongest of the bunch. We do understand: if you’re buying a home in a competitive market, and your offers keep getting pushed to the bottom of the pile, it’s hard not to resort to desperate measures — offering more than the asking price, pledging to close on the home in lightning quick speed, or even waiving the financing contingency and risking your entire earnest money deposit.

But waiving a physical inspection of a house is never a good idea unless the house is close to brand spanking new, which, of course, ups the odds that nothing costly or bothersome might be revealed during the inspection. The problem is, even in newer homes, what you see is not necessarily what you get. It’s what’s beyond the surface, or items that you can’t identify as problematic, that cause the biggest issues, as anyone who watched rehab/remodel programs on HGTV will tell you.

The typical buyer would have a tough time spotting asbestos, knob and tube wiring, lead paint, evidence of termite infestation, a leak inside the HVAC system, how the house is being propped up on jacks, or be aware of how a single toilet flush could change your morning shower from warm and toasty to arctic and shocking. Imagine moving in and trying to turn on the heat, nothing happens, and the fix is $10,000. Picture standing there buck naked in your bathroom, and the power goes off all over the house when you turn on your hairdryer. Traipsing down a flight of stairs to that electrical panel outside the back door semi-dripping wet in 25-degree weather is not something we would wish on our worst family members.

We realize bidding wars can cause buyers to spend an inordinate amount of time finding the right home, making them crazy-desperate, asking themselves “how bad can it be?” when considering waiving the home inspection. But when do you ever hear any GOOD stories about people who took that leap? And waiving an inspection can cost you a fortune. But there are a few things you can do to hedge your inspection bets while remaining competitive.

If you love the home and the buyer will permit it, inspect it before you make an offer or sign a contract. At best, it passes muster and when you offer you can waive the contingency. At worst, you’ve spent a few hundred dollars on a house you don’t end up buying.

If the seller already had their own inspection performed (which is a wise thing to do in order to make a home as marketable as possible), you have the luxury of scrutinizing that report without spending a dime. Even then, however, many buyers will get an inspection of their own because, like an attorney representing a client, the inspector is liable only to the person who paid for and ordered the inspection. And if that person missed something in their report, you would not have any recourse.

Because Realtors understand that time is vital for good outcomes, they will encourage you to get your offer in quickly and advise you to pre-schedule an inspection even before the ink is dry on your offer. Seasoned agents have relationships with inspectors at the ready to ring the seller’s doorbell within a day or two of acceptance. And writing in a short inspection contingency timeframe into your offer assures the seller that momentum is alive and well.

Bidding wars are rife with emotion as well as fear-of-loss, but it’s wise to keep the bigger picture in mind when purchasing what may well be your life’s biggest asset. Your goal is to wake up in that house morning after morning knowing you did all you could to ensure a mostly problem-free investment in yours and your family’s future. Because money pits are no fun.

Source: Zillow/TBWS

Bill Nickerson NMLS #4194 | Email | 978-273-3227

Knowing the difference between a buyer’s and seller’s market is a good idea

There is one verse missing from the famous and well-worn song Turn, Turn, Turn written by the Byrds back in 1962. The one that should be added is “there is a time to buy, a time to sell…” Realtor’s Terri Williams likens it to a card game (which was also a song) about knowing “when to hold ‘em and when to fold ‘em.”

Buyers’ markets and sellers’ markets are simply part of the economy journey, reflecting not just what is happening on a national level, but also what happens depending on supply and demand. They might also reflect tax laws and consumer confidence. It’s a mixed bag. When it’s someone’s “market,” that means the market favors them. So a buyer’s market means it’s a great time to consider buying. A buyers’ market usually means a period of six months or longer where prices steadily soften. Inventory usually rises, and interest rates drop to fuel the market. The bigger the inventory, the more negotiating there will be, including asking for perks such as help with closing costs, a credit in escrow for a new paint job, etc. It may also mean a quick closing if you need the place right away.

So how does this affect sellers? It’s not a happy time for them. It takes longer for homes to sell and hoping to get the price the seller thinks their house is worth is often a pipe dream. They can stack the odds for it, however by making sure their home is move-in ready and shows well both in person as well as in photos.

 

For some time now, it has been the reverse of this. With little inventory, sellers have been reaping the rewards of the market with multiple offers and naming their terms. That is, however, now changing according to a recent CNBC article, which says that consumer sentiment in housing improved in August and that they believe mortgage rates will keep dropping. Say one Dallas-based real estate agent: “It’s not a seller’s market right now. Now is not the time for sellers to put out these crazy prices. Appraisals have gotten a lot harder, and buyers are a little more cautious. They’re more willing to take their time.” The article goes on to say that while mortgage rates are low, buyers are becoming more cautious. With competition cooling, sellers can no longer command any

price.

“Unfortunately, much of the lower interest rate environment can be attributed to global economic uncertainties, which appear to have dampened consumer sentiment regarding the direction of the economy,” said Doug Duncan, chief economist at Fannie Mae in the article. “We do expect housing market activity to remain relatively stable, and the favorable rate environment should continue supporting increased refinance activity.” CNBC writer Diana Olick agrees that home prices are still higher than they were a year ago, but the gains have been moderating.

Source: Realtor, CNBC, TBWS

Bill Nickerson NMLS #4194

Feds leave rates unchanged

The Federal Reserve left borrowing costs unchanged, continuing to delay any rate moves amid persistently low inflation.

The U.S. central bank voted unanimously Wednesday to maintain its benchmark interest rate in a range of 2.25 percent and 2.5 percent, a move that many anticipated despite stronger-than-expected growth in the first quarter of 2019 and an unemployment rate near a half-century low.

“Economic activity rose at a solid rate,” while job growth continued to be “solid, on average, in recent months,” the Federal Open Market Committee (FOMC) said in its post-meeting statement released Wednesday in Washington. “Overall inflation and inflation for items other than food and energy have declined and are running below 2 percent.”

Inflation weakness driving Fed’s patience

Following their April 30-May 1 gathering, however, Fed officials signaled that the primary driver for holding the federal funds rate steady is now inflation – and specifically why it’s continued to register below the Fed’s target during an expansion set to become the longest on record. Fed Chairman Jerome Powell said during the press conference following the meeting that those global risks had “moderated” since officials last met.

The Fed in its post-meeting statement got rid of any language saying that the economy had “slowed” from its previous robust pace and that inflation remained “near” its 2 percent target. They also noted that household spending had “slowed.”

Prices excluding food and energy, as measured by the Fed’s preferred gauge, cooled in March to 1.6 percent, the slowest pace since January 2018, according to the Department of Commerce.

“Those aren’t conditions under which the Fed feels compelled to change interest rates in either direction,” says Greg McBride, CFA, Bankrate’s chief financial analyst. “The economy looks better than it did when the Fed last met in March, but with inflation readings continuing to decelerate, the Fed is no closer to resuming rate hikes.”

Pressure mounting for a rate cut

The Fed’s decision comes amid President Trump’s repeated calls for the U.S. central bank to cut interest rates. The chief executive on Tuesday renewed his requests in a tweet, urging the Fed to lower borrowing costs by one percentage point to send the economy “up like a rocket.”

The markets are also looking for signs of a cut. Fed watchers are betting there’s nearly a 30-percent chance that the U.S. central bank will cut rates at some point this year, according to CME Group’s FedWatch tool.

Officials, however, gave no indication of whether their next move could be a cut.  “We think our policy stance is appropriate, and we don’t see a strong reason for moving in one direction or the other,” Powell said.

information provided and written by:

SARAH FOSTER   @SARAHFFOSTER

MAY 1, 2019 in FEDERAL RESERVE

Bill Nickerson of Fidelity Cooperative Bank