Tag Archives: Interest rates

In recent interviews, the Fed has made it clear they want to move away from the pledge to be patient. They have held their benchmark short-term rate, the federal funds rate, near zero since December 2008. The lackluster housing market was concern on Yellen’s mind when she gave the speech emphasizing the patience pledge.

Each 1 percent drop in interest rates in the last 15 years has allowed home sellers to raise prices 12 percent. According to the report, a typical family earning $60,000 per year can afford a mortgage payment of $1,800 per month, and would have qualified for a $245,000 mortgage in the year 2000 when mortgage rates were 8 percent. This same family qualifies for a home priced at $377,000 when rates are 4.0%.

Federal Reserve Chair Janet Yellen in her testimony to Congress on Wednesday said the Fed would be using "patience" on deciding when to increase interest rates. Yellen was cautious about citing any particular date for the increase, citing slow productivity growth as one of the reasons for the delay.

Policymakers are apparently in no hurry to start hiking interest rates just yet, bringing back language from the last FOMC statement: "Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy."

In a policy statement released following the last 2014 meeting of the Federal Open Market Committee (FOMC), the central bank reaffirmed its view that the economy is expanding at a "moderate pace," pointing to continued improvements in the labor market tempered by still-high numbers of unemployed and underemployed Americans and slower growth in the housing sector.

A new survey released by the Wall Street Journal finds most don't expect the Federal Reserve to begin raising interest rates until mid-summer 2015 or later. In a poll of economists nationwide, the Journal found only about a third believe the Fed will start hiking up rates before June next year. That number is down from 45 percent of economists in the publication's August survey.

A new survey from the Federal Reserve Bank of San Francisco finds investors aren't buying in to the central bank's projections of interest rate increases in the coming years. The San Francisco Fed's report comes one week before the FOMC announces its next economic policy move—and before Fed Chair Janet Yellen is scheduled to give her own hints at the central bank's timeline.

A slower than anticipated first half has killed off any enthusiasm economists had for housing at the start of 2014, a survey published by the Wall Street Journal finds. In the Journal's latest monthly survey, a panel of economic experts called for new housing starts to average a seasonally adjusted annual rate of 1.01 million this year, a 9 percent decline from their prediction at the beginning of the year.

As the U.S housing market climbs back to healthy, a third of it is less affordable now than it's been all century, according to RealtyTrac. The firm's latest housing affordability report, released Thursday, found that 34 percent of the 1,200 U.S. counties it surveyed are at their least affordable, on average, since 2000.

Based on mortgage performance data as of the end of April, Black Knight Financial Services noted there are approximately 2 million modified mortgages are due for mortgage rate resets in the coming years. With the economic recovery still hobbling along, the company estimates more than 40 percent of that group remain underwater.