Industry News
Mortgage Industry News
No Change From Fed
04/29/2011
The most highly anticipated economic event this week was Wednesday’s Fed meeting. The Fed indicated that it will not make any changes in policy at this time, which investors took as positive news for stock and bond markets. Weakness in the GDP and Jobless Claims data released this week also helped mortgage rates improve. As a result, mortgage rates ended the week a little lower.
As expected, the Fed held the fed funds rate steady, and the statement was very similar to the last one. The Fed made no change to its plans to complete the $600 billion quantitative easing program by the end of June and will continue to reinvest the proceeds from maturing securities to maintain the size of its portfolio. The Fed did lower its near-term forecast for GDP growth and raised its outlook for both overall and core inflation levels for this year. Investors found relief in the lack of surprises and boosted their investments in both stocks and bonds, including mortgage-backed securities (MBS).
The housing data released during the week reflected improvement from last month. March New Home Sales rose 11% to an annual rate of 300K units. The inventory of unsold new homes fell to the lowest level since 1967. March Pending Home Sales, a leading indicator, rose 5%. The chief economist of the NAR predicted that existing home sales will increase by 5% to 10% in 2011 due to an improving labor market and favorable affordability levels.
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