 |
 |
Fed Bumps Bank Rates But Long Term Mortgage Rates Aren't Climbing
 E-mail Friend
 Printer Friendly
LOS ANGELES -- As mentioned in other columns we've posted, I'll take the risk of being redundant by saying that The Fed (Federal Reserve) cranked the cost of borrowing
for Americans who own or intend to purchase properties countrywide by raising
short-term interest rates (as they have promised repeatedly). On Tuesday there
was a one quarter point hike, making it the eighth bump since June 2004. That
brings the key bank lending rate up to an even 3 percent.
The Fed said in their formal
announcements that overall spending growth has eased-up a bit, mainly because of the
elevation in energy prices in recent months. A key point sidelining such is that
that inflationary pressures at the consumer level of our economy have risen in
recent months.
Here's the kicker: Despite
higher short-term
interest
rates, longer-term mortgage rates have stayed at a historically low level.
Any economic expert will tell you that this is an anomalous situation. It is
most abnormal for long-term rates to have laid at the bottom like they have
given the circumstances. It appears that mortgage rates as well as the bond
market have responded to the Fed's obviously successful attempts at deflating
inflation and furthermore keeping control of it.
The Federal Reserve appears
confident that although though we are experiencing inflation, conglomerate
belief in Washington is that inflation is, and will continue to be, under
complete control. Synopsis: The Fed believes without a shadow of a doubt that
inflation will not become a problematic state for our economic big picture.
According to the official
statement, The FOMC (Federal Open Market Committee) decided Tuesday to raise its
target for the federal funds rate by 25 basis points to 3 percent. The belief
system behind the FOMC is that, even after this action, the stance of monetary
policy remains accommodative and, coupled with robust underlying growth in
productivity, is providing ongoing support to economic activity. More on how
this is really going to affect homeowners and those seeking low rate
home
purchase mortgages throughout the next week.
|
 |
|
|
|
|
