Fed Funds Rate Held Steady at 5.25%
And the whole financial world anxiously sat on the edge of their seats this week, waiting to see what the Fed had in store following their most recent meeting. But no surprises to have been worried about – as expected, the Fed decided to hold the Feds Funds Rate steady at 5.25%. But they did make a subtle change in the carefully crafted wording of their Policy Statement, which suggested that a rate cut may be more likely than a hike as their next move down the road. However, the Fed also said that Core inflation remains above their comfort level…and the Fed will not cut rates as long as this remains true. Mortgage Interest Rates are not directly controlled by the Feds so changing the Feds Fund Rate doesn’t always mean mortgage interest rates move accordingly.
The Fed’s mission is to fight inflation, period. And until their favored measure of inflation, the Core Personal Consumption Expenditure Index dips below 2% for a few consecutive months, don’t expect to see a Fed rate cut anytime soon.
Mixed news from the housing front, in the form of new construction Housing Starts bouncing higher, yet new Building Permits moving lower. Existing Home Sales rose somewhat unexpectedly in February, marking the largest monthly gain since March 2004 and the highest pace of sales was the highest since April of 2006. Overall, not bad reports, considering how the media still wearily beats away on their housing bubble drum. But it wasn’t all great news – overall sales are off 3% from last year, the inventory of existing homes on the market rose slightly to a 6.7 month supply, and the median price of a home declined slightly to $212,800. Many experts feel it is likely the housing market saw its worst days during August of last year, but although stabilizing, the housing market still has a ways to go.
John R. Thomas – NMLS 38783
Certified Mortgage Planner – Primary Residential Mortgage, Inc.
302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office
248 E Chestnut Hill Rd, Newark, DE 19713