The Fed publishes meeting minutes 8 times annually — three weeks after each scheduled Federal Open Market Committee get-together. The Fed Minutes summarizes the FOMC meeting.
The Federal Reserve released the minutes from its August 9, 2011 Federal Open Market Committee meeting Tuesday.
The Fed Minutes contained no surprises and, as a result, mortgage rates across Kentucky and nationwide have idled.
Although it gets less press attention, the Fed Minutes is every bit as important as the more highly-publicized, post-meeting statement from the FOMC. With its detailed record of conversation, the Fed Minutes highlights the discussions and debates that shape our nation’s monetary policy.
For example, here is some of what was said at the Fed’s August 2011 meeting :
- On growth : Economic growth had been slower than the committee expected
- On housing : The market “remains depressed”. Underwriting standards are “tight”.
- On rates : The Fed Funds Rate will remain low until mid-2013
In addition, the Fed talked about whether a third round of asset purchases should be announced. Ultimately, that plan was rejected by consensus.
The FOMC’s next meeting is a 2-day meeting, scheduled for September 20-21. The meeting was originally scheduled for just one day, but Fed Chairman Ben Bernanke chose to extend it to two. Wall Street believes that the extension was made so Fed members could discuss new forms of economic stimulus.
Depending on the form of said stimulus — if it should even occur — mortgage rates may rise or fall. We can’t know for certain unti the size and scope of the Fed’s plan is known.
For now, mortgage rates remain rock-bottom. There’s more room for rates to rise than to fall. If you’re shopping for a loan and the rate looks right, therefore, consider locking on it.
After 3 straight months of gains, the Pending Home Sales Index slipped 1 percent in July. The monthly report is published by the National Association of REALTORS® and measures the number of home under contract to sell nationwide.
The Pending Home Sales Index is closely watched by Wall Street and analysts because it’s a forward-looking housing market indicator. Unlike most housing market data, though, Pending Home Sales forecasts a future housing market event. In this case, the Existing Home Sales report.
In its methodology, the Pending Home Sales Index states that 80% of homes under contract close within 2 months, with most of the remaining home going to closing within Months 3 and 4.
We would expect home sales data to taper into the fall buying season, but this year, they may taper more than normal. This is because, in a separate report, the National Association of REALTORS® said that contract cancellation rates are running high.
As compared to a 4 percent contract cancellation rate in May 2011, June and July both registered 16 percent. This means that fewer homes tallied as part of July’s Pending Home Sales Index will show up as “closed sales” this fall.
Contracts can be canceled for any number of reasons including more stringent mortgage guidelines, appraisals falling short of the purchase price, and changing mortgage loan limits.
For home buyers in Mason , the Pending Home Sales Index may represent an opportunity. Not only are fewer homes going under contract nationwide, but with cancellation rates spiking, sellers may be more willing to “make a deal”.
Note, though, like all real estate, the pace at which homes go under contract is a “local” statistic; you can’t assume national data applies to all markets equally. Your home market, for example, may out-perform — or under-perform — the national average.
For a closer look at what’s happening on your street including the speed at which homes are selling, talk to a local real estate agent.
With seasons changing, it’s a good time to look at weatherizing your home. Whether you live in a single-family home, a multi-family property, or a condominium, your home has windows and, through those windows, air escapes.
Even with your windows closed.
In this brief tutorial from Lowe’s, you’ll learn how to use caulk to seal the gaps between your windows and doors and their respective framing to keep your home’s inside air in, and the outside air out.
Weatherizing your windows and doors is a 3-step process:
- Find the air leaks
- Clean the surface of existing caulk and debris
- Seal surface with new caulk, and clean-up
As shown by the video, there are no technical skills required to repair and replace your home’s caulking. It may require a little bit of elbow grease, however. And, depending on your windows’ locations, use of a ladder may be required.
If you’d like professional help weatherizing your home, please ask me for a referral in Mason.
Low mortgage rates are terrific — if you can get them.
One week after posting its lowest mortgage rate in 50 years, Freddie Mac reports that the 30-year fixed rate mortgage rose by an average of 7 basis points nationwide this week to 4.22%. To get the rate, you’ll pay an average of 0.7 “points”.
This week’s rise in the 30-year fixed rate mortgage pulled rates off their all-time lows so either you locked last week’s rock-bottom rates, or you missed it.
Mortgage rates are rising.
As a refinancing homeowner or home buyer in Mason , rising mortgage rates are something to watch. This is because, as mortgage rates rise, so do the long-term interest costs of giving a mortgage, increasing your homeownership costs.
For example, if you failed to lock a rate last week when rates were bottomed, and then decided to lock-in only after rates had climbed 0.25 percent, at the new, higher rate, over the life of your loan, you would have responsibility for an extra $5,300 in interest costs for every $100,000 you borrowed.
Rising mortgage rates can be expensive.
For home buyers, rising mortgage rates pose a second problem — they erode your purchasing power. A home that fits your budget at today’s rates may not fit your budget at next week’s rates. And because mortgage rates change quickly, you can sometimes feel ilke you’re racing the clock.
The hard part about mortgage rates, though, is that we can never know what they’ll do next. On some days they rise, on some days they fall, and on some days they stay the same. Instead of trying to “time the bottom”, therefore, a good strategy can be to lock the first, low rate that fits your budget. Then, if rates are lower in the future, you can look to refinance at that time.
Mortgage rates remain at historical lows. It’s a good time to lock a rate.
CNNMoney recently released its Best Places To Live 2011 list.
The annual survey is based on data from Onboard Informatics. Using Quality of Life factors such as education, crime and “town spirit”, and focusing on towns with between 8,500 and 50,000 residents, the CNNMoney survey ranks the country’s best “small towns”.
To be eligible, towns must be have a median household income greater than 85 percent, and less than 200 percent of the state median income; must not be a categorized as a “retirement community”; and must be racially-diverse.
From a list of 3,570 eligible towns nationwide, Louisville, Colorado was ranked #1.
The complete Top 10 Best Places to Live as cited by CNNMoney, and their respective average home listing prices :
- Louisville, Colorado ($383,569)
- Milton, Massachusetts ($577,008)
- Solon, Ohio ($291,162)
- Leesburg, Virginia ($486,018)
- Papillion, Nebraska ($218,520)
- Hanover, New Hampshire ($643,500)
- Liberty, Missouri ($177,678)
- Middleton, Wisconsin ($347,770)
- Mukilteo, Washington ($345,487)
- Chanhassen, Minnesota ($418,607)
Rankings like these can be helpful to home buyers nationwide, but it’s important to remember that the Best Place To Live survey is subjective. You may find none of the above towns to be to your liking.
You may also find the lowest-ranked city to be your favorite.
In other words, before making a decision to buy, connect with a real estate agent who has local market knowledge. That’s the best, most reliable way to make sure you get the housing data that matters to you.
Sales of newly-built homes slipped in July, falling 1 percent as compared to June. Home buyers closed on a seasonally-adjusted, annualized 298,000 units, the lowest reading since February.
The supply of new homes, however, remained flat.
July’s 6.6 months of supply equaled June’s tally and remains near the multi-year low of 6.5 months set in May of this year. The figures suggest a new home market that’s finding its balance.
Builders are building to meet demand, and not much more.
The New Home Sales report may have read differently if not for the Northeast Region which doubled its sales units in July. The gains buoyed the broader data, re-affirming the importance of looking past national data and focusing on what’s local; the national market is not reflective of any given town
Broken down by region, July New Home Sales fared as follows:
- Northeast Region : +100.0% from June 2011
- Midwest Region : +2.4% from June 2011
- South Region : -7.4% from June 2011
- West Region : -5.9% from June 2011
However, as with most months, it’s important that we recognize the New Home Sales data’s margin of error.
Although New Home Sales showed a 1 percent drop in July, the reported margin of error was ±12.9%. This means that the actual reading could have been as high as +11.9 percent, or as low as -13.9 percent. Because the range includes both positive and negative values, the Census Bureau assigned its July data “zero confidence”.
New Home Sales appear to be stable, despite falling sales figures. Supplies remain flat and builder confidence does, too. The good news for buyers in Cincinnati , then, is that lower mortgage rates are making homes more affordable.
Mortgage rates are currently at 50-year lows.
Home resales slipped in July.
According to the National Association of REALTORS®, Existing Home Sales nationwide fell to 4.67 million units on a seasonally-adjusted annualized basis last month. It’s the fourth straight month below the 5 million mark, and the report’s lowest reading since November 2010.
An “existing home” is a home that’s been previously occupied or owned.
In addition, the Existing Home Sales report showed home supplies rising nationwide. At the current pace of sales, in other words, the complete, national “For Sale” inventory would be exhausted in 9.4 months. This, too, is the worst reading since November 2010.
On a units basis, however, the number of homes for sale actually fell in July. As compared to June, home resale inventory dropped 65,000 units to 3.65 million.
From these figures, we can infer that, despite low mortgage rates and lagging home values, buyer activity is slowing in Kentucky and nationwide. This may be seasonal, or it may be a long-term trend.
Either way, there’s opportunity for today’s home buyers.
With mortgage rates at all-time lows, home affordability is peaking. More households can afford housing payments than during any time in history and with the fall season approaching, buyers in Mason may find contracts negotiations to be more “friendly”.
This can mean lower sale prices and larger concessions from sellers — the hallmark of a Buyer’s Market.
It’s a good time to look at your options. Talk to your real estate agent and see what’s out there for you. Low home prices may persist, but low mortgage rates likely won’t.
Labor Day is nearing; the unofficial end of summer across Ohio. If you’re among the many Americans planning an end-of-season barbecue, you’ll want to make sure your grill is clean.
A clean grill makes better tasting food.
There are several ways to clean a grill but, for owners of gas grills, the first step always is to disconnect the gas source.
Next, open your grill and remove its metal pieces. This includes grates, trays and flame guards. Take these pieces to your kitchen. If the oven has a self-cleaning mechanism, place the items in your oven and let it “self-clean”. As the temperature reaches 900 degrees or more, residue will literally fall off your grill parts.
Be sure to wipe clean your oven once the cycle completes.
If your oven is not self-cleaning, wash the grill parts in your sink using hot water and detergent. You’ll want to soak the parts in soapy water if they’re especially dirty. Once clean, allow the parts to air dry.
Then, return to your grill and using a wire brush, scrape the residue from the sides, top and bottom of the appliance. Again, using a soapy hot water mixture, wash and wipe down the inside of the grill. Rinse it clean once the residue is removed.
Re-assemble your grill.
Lastly, reconnect the gas source (if applicable) and allow the grill to burn for 5 minutes. This will burn off any lingering residue from the cleaning process, including soap and detergent.
And that’s it!
Plan on cleaning your grill at least twice annually with heavy use.
Last week, at its 5th scheduled meeting of the year, the Federal Open Market Committee voted to leave the Fed Funds Rate in its target range near zero percent.
The Fed Funds Rate has been near zero percent since December 2008 and, in its official statement, the FOMC pledged to leave the Fed Funds Rate untouched for at least another 2 years.
This doesn’t mean mortgage rates will be untouched for 2 years, though.
Mortgage rates and the Fed Funds Rate are two different interest rates; completely disconnected. If mortgage rates and the Fed Funds Rate moved in tandem, the chart at right would be a straight line.
Instead, it’s jagged.
To make the point more strongly, let’s use real-life examples from the past decade.
- June 2004, 529 basis points separated the Fed Funds Rate and the 30-year fixed mortgage rate
- June 2006, 168 basis points separated the Fed Funds Rate and the 30-year fixed mortgage rate
Today, the separation between the two benchmark rates is 407 basis points.
1 basis point is equal to 0.01%.
Between now and mid-2013, when the Fed may begin changing the Fed Funds Rate, the spread between rates will change based on economic expectation — not Fed action (or non-action). If the economy is expected to improve, mortgage rates in Mason will rise and the spread will widen.
Should mortgage rates cross 6 percent before the Fed starts raising rates, it will create the widest interest rate spread in history, surpassing the 615 basis point difference set in August 1982.
At the time, the Fed Funds Rate was 10.12% and mortgage rates averaged 16.27%.
On the other hand, if the economy shows signs of a slowdown for late-2011 and beyond, mortgage rates are expected to drop.
Shopping for a mortgage can be tough — especially in a volatile environment like the current one. Mortgage rates move independent of the Fed Funds Rate. Make sure you’re watching the proper market indicators. It’s your best chance to lock the lowest rate possible.
Last week, the Federal Reserve pledged to leave the Fed Funds Rate near 0.000 percent until at least mid-2013. For credit card holders in Kentucky who carry a monthly balance, this is good news. Because of the Fed’s call, credit card rates are unlikely to rise before mid-2013.
But cardholders can save on more than just interest costs, as you’ll learn from this two-and-a-half minute piece with NBC’s The Today Show. In the interview, you’ll hear about “built-in” perks offered by most credit cards and ways by which you can save on everyday goods and services.
For example, did you know your everyday credit card might offer:
- Travel perks : Automatic trip cancellation protection and car rental insurance.
- Shopping perks : Discount admission to concerts and museums; free shipping from overseas.
- Consumer perks : Price protection against a drop in price; insurance against theft; extended warranties.
And it’s not just “high end” cards that offer these options, either. Credit cards of all types do what they can to improve consumer loyalty. Offering free perks is just one way in which they try.
Most credit cards offer websites detailing cardmember perks and benefits. Visit the site of your favorite card and see where you might save on everyday items.