Danny Salas

Chico, CA Interest Rates Market Report – Economic Influences – March 16, 2010

Careful Floating Into The Morning

FOMC Day

That’s right!  At 11:15 pm PST, Good ‘Ole Ben Bernanke and The Federal Open Market Committee will be rolling out the Interest Rate Decision and Monetary Policy Statement, from their meetings over the past two days.  It’s anticipated that the Fed will leave the overnight rate at 0.0% – 0.25%.  What will be of particular interest will be if the Fed changes their stance on their “extended period” statement regarding leaving interest rates low for an “extended period of time.”  The Fed, if not now, may very shortly be, in quite a precarious position regarding juggling inflation concerns and an economy that’s not creating jobs.  When do they pull the trigger?  Some say sooner, rather than later.  However, it’s expected that the statement will remain, with inflation concerns not too prevalent, currently.  It’s important to note, that some feel as though the “extended period” language should change somewhat.  Remember, that once the language changes, the writing’s on the wall and will effect many things, including the Carry Trade that Banks have been able to capitalize on and assist in getting out of the pickle that they were in, after the mortgage credit crisis.

$1.25% Trillion Purchase Program

The world will also be interested in a solid confirmation that the government is not interested in extending that $1.25% Trillion Government Mortgage-Backed Security Program.  With this major player out of the purchase market, rates will suffer.

Housing Trajectory

Housing Starts were 575,000 for February.  Building Permits were reported at 611,000.  The government said that the overall housing starts were down 5.9% and permits were down 1.6%.  This is somewhat confusing, because housing starts are up 39%, on a year-over-year basis.  Building permits are up 32% on a year-over-year basis.  So, the housing trend trajectory is moving in the right direction, it just might be gradual.

This Afternoon, Things Could Change To A Lock Mode

Locking Advice

I would feel comfortable locking, however, it’s okay to float into the Fed Policy Statement.  We have support at the 50-Day Moving Average, but pricing is already built into a near certain decision to leave the fed-funds rate at 0.0% – 0.25%.  So, there would have to be a huge surprise to have any significant movement to lower interest rates.   Either way, it’s a good time to buy!

YOU DON’T WANT TO MISS THIS EVENT!!!

Scott St. John will be speaking at The Big Room At Sierra Nevada, Friday, March 26, 2010.  Scott is a 3rd-Term Governing Board Member of Freddie Mac.  You’ll have an opportunity to inquire into expected economic future of the United States, Real Estate and its REO future, and what’s happening behind the scenes that is making closing loans to more timely and difficult, these days.   REGISTER AT THE CHICO OR PARADISE BOARD OFFICES.  $10 includes appetizers.  $15.00 AT THE DOOR!

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Related Must Reads

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This entry was posted on Tuesday, March 16th, 2010 at 8:34 am and is filed under Chico Home Loans, Home Buying, Interest Rates. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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