Fixed Rates Like the Fed
FW Market Update
Underlying credit markets may have been roiled this week, but you can't tell that from that stance of the Federal Funds Rate and the average 30-year fixed-rate mortgage (FRM). After this week's FOMC meeting, Fed Funds remained at 5.25%, while fixed rate mortgages closed the nation's leading mortgage survey at an average rate of 6.50%. However, the average five-one Hybrid ARMs ticked two basis points (.02%) higher, landing at 6.26% for the week.
The statement which the Fed released at the close of the FOMC meeting sounded a lot like the one from August: "moderation in growth"... "cooling of the housing market"... "readings on core inflation elevated"... "some inflation risks remain." As with last time, the decision to hold short-term rates unchanged was not unanimous.
What wasn't included this time, though, was a characterization that the housing market was cooling "gradually." Also absent was the assertion that "lagged effects of increases in interest rates and energy prices" were contributing to the slowdown. Housing seems to be cooling more quickly than the Fed anticipated, perhaps, and the effects of previous interest rate increases and high energy costs appear to be part of the picture now.
The National Association of Home Builders
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