FEED HOLDS ITS BENCHMARK RATE STEADY

Fall HousingSeptember marked the start of football season for fans across the country. But investors and economists were focused on another team—the Federal Open Market Committee (FOMC), and whether it would hold its benchmark Federal Funds Rate steady.

What Is the Fed Funds Rate?
It’s been more than nine years since the Fed raised the benchmark rate that banks and other depository institutions use to lend money to each other overnight. Despite some speculation to the contrary, the Fed held this rate steady at its September meeting instead of raising it. Why is this play important to homebuyers and homeowners? When the Fed Funds Rate climbs, home loan rates and lines of credit often increase as well, depending on the market and overall economy.

Fed Funds RateWill the Fed Funds Rate Rise This Fall?
Slowing global economies coupled with tame inflation were cited as two of the main reasons for the Fed’s decision to hold the Fed Funds Rate steady in September. As we move further into October, the Fed will continue to monitor key statistics that signal improvement to the economy. In August, for example, consumer spending and retail sales were up, while housing starts have kept pace with more than one million new excavations each of the last five months.

However, the labor sector disappointed in August, as U.S. employers added 173,000 jobs, which was below expectations and the second lowest level in the past 19 months. Overall though, the labor market is stabilizing, adding an average of 212,000 workers each month through August of this year.

The Fed will consider a rate hike again at its meeting later this month before calling its next play. September data here at home and global conditions around the world will be key factors in its decision.

The Bottom Line
Home loan rates remain attractive and near historic lows. If you have any questions about the housing market and home loans, please don’t hesitate to contact me.

This article was taken from my October 2015 issue of YOU Magazine. Click here to view the full newsletter.

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