Just as we were enjoying another month of mixed economic news and the markets were “hoping” for a little reprieve from the Federal Reserve Board, one of the Fed Governors shocked the markets with this statement reported by the Wall Street Journal — “It will take a significant deterioration in the economic picture for me to be disinclined to move ahead,” Federal Reserve Bank of Atlanta President Dennis Lockhart said in an interview with the Journal.
The Wall Street Journal article went on to report that Lockhart’s comments followed those of James Bullard, President of the St. Louis Fed — “we are in good shape” for a rate increase in September.These comments by Fed officials shocked the markets somewhat because long-term rates had been falling in late July and early August. Upon release, rates reversed course. The good news is that more bad economic news overseas helped mitigate the increases rather quickly, but it just tells us how jumpy the markets are with regard to the threat of the Fed raising rates in September. As we have continuously pointed out, the greatest effect of the Fed raising rates is likely to be on shorter-term rates. These short-term rates also have risen in anticipation of the Fed making a move.
Meanwhile, there is plenty of time for intervening variables to change the equation. The recent devaluation of China’s currency may put pressure on the Fed because the strong U.S. Dollar continues to hurt our exports. There is one more jobs report to be released before the Fed meets in September, as well as a revision of the measure of economic growth for the second quarter. Many are expecting second quarter growth to be revised upwards. While we progress toward September, we expect the markets to hang on every word uttered by a Fed official. This could cause increased volatility in all markets.
Current Indices For Adjustable Rate Mortgages
Updated August 14, 2015
Fifteen Republicans are fighting for their party’s nomination for president in 2016. The Democratic seekers of the White House so far number five. All 20 of these possible presidential candidates have divergent policy positions, even within their own parties. But one area that all generally agree on is that the tax code is too complex. Another tax issue that also seems consistent across most major candidates is that a tax break for homeowners is safe. Even this election cycle’s biggest booster of the so-called flat tax, Sen. Rand Paul, R-Ky., says in his proposal that he would continue tax deductions for charitable donations and interest on home loans. The numbers make it clear why homeowners get such attention. Although Commerce Department data show that homeownership for the first quarter of this year was at its lowest level in 20 years, most of us still own the places where we live. Almost 64% of Americans own their homes. So while weakened, the American dream of a yard for the kiddies and a home loan that offers a tax break persists. Source: BankRate.com A recent survey shows that consumers saving for a home are willing to forego modern conveniences in order to secure a down payment. That may even mean giving up phones, Internet, cable TV, or Starbucks, according to a newly released survey by the business advisory firm the Collingwood Group. Potential first-time home buyers are making such sacrifices because they want to be able to make a sizable down payment on their home purchase. Nearly two-thirds recently surveyed say they’d like to put 20 percent down or more on their home purchase. First-time home buyers are increasing their ranks lately, with their share in the housing market rising to 32 percent in May. That matches their highest share since September 2012, according to the National Association of Realtors®. A year ago, first-time buyers represented 27 percent of all buyers. The survey showed that around 62 of potential first-time buyers are making plans to purchase a home within the next two years. In addition, more than two-thirds of consumers – 68 percent – who say they’re looking to purchase their first home say they want a move-in ready home, while one-third said they’d buy a fixer-upper.Source: MReport |
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