It’s no surprise that the Federal Reserve left the funds rate at the current lows of 0 – 0.25% on the heals of continued weak housing data. What investors are looking for is “what” is being said in the FOMC Statement that is released in conjunction with their rate decision.
If you have a home equity line of credit that is tied to the prime rate, your rate should be unchanged (for now). Otherwise, this decision does not have a direct impact on mortgage rates. It does influence the markets (stocks and bonds) which impacts mortgage rates.
Here’s what I extracted from today’s Statement:
Household spending is increasing but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit….employers remain reluctant to add to payrolls. Housing starts remain at a depressed level. Financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad. Bank lending has continued to contract in recent months….subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.
Prior to the FOMC Statement, mortgage backed securites are flat (but still at record levels with very low mortgage rates). Follow me on Twitter to see live rate quotes. If I have intraday rate changes today, I’ll update this post.