First Time Home Buyers
The Fed Open Market Committee posted a 9-1 vote in favor of leaving the Fed Funds Rate unchanged.
That doesn’t directly relate to “no change” in rates for the first time home buyer programs, but the release was good news for mortgage rates.
In its press release, the FOMC noted a number of positive things. Sound bites included:
- U.S. economy “has continued to strengthen”
- Jobs market “is stabilizing”
- Business spending “has risen significantly”.
Positive economic news is typically negative for bonds. This is six straight optimistic releases from the Fed and we’re moving out of the 2008-2009 recession.
The main reason that first time home buyer mortgage rates didn’t move was that there is simply no threat of inflation right now. That’s great news for bonds and great news for mortgage rates.
There are still some threats:
- High unemployment threatens consumer spending
- Housing starts are at a “depressed level”
- Consumer credit remains tight
Positive tone, slight concerns, and indications that inflation is under control. Does housing drive the economy or does the economy drive housing? Probably both.
What we’re seeing from the Fed right now are the signs that the people who buy now should see lower rates and lower home prices. Better news for today’s first time buyer is that a rising economy will help make buying today a great long-term option as housing prices recover.
Next release is April 27-28.
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