Continuing to raise short-term rates, the Fed maintains a course on mortgages and other news

Published by
Peter Kavinsky

As the industry and market change faster than ever, plan to get together with the best real estate community at our flagship event. Join us at Inman Connect New York, January 24-26, and try your ticket to the future. Check out these just announced speakers for this must-attend event. Register here.

Mortgage markets appear to have already priced in their fourth sharp increase in short-term interest rates this year as the Federal Reserve continues what has proved to be a difficult fight against inflation.

Despite the Fed’s aggressive announcement of Wednesday’s 75 basis point hike in the federal funds rate to 3.25 percent, mortgage rates, which have recently risen to levels not seen since 2008, may be poised for a breather.

Yields on 10-year Treasury bonds, considered the barometer of mortgage rates, slipped after Wednesday’s meeting, when Federal Reserve Chairman Jerome Powell analyzed the Fed’s thinking.

Russia’s war against Ukraine has driven up energy and food prices and created additional upward pressure on inflation, Powell said at a news conference following a two-day meeting of the Federal Open Market Committee.

While the Fed is likely to continue its current aggressive short-term rate hike strategy, Powell reassured bond market investors that the central bank is not looking to further accelerate the pace of Treasury and mortgage debt removal.

In addition to expecting additional short-term rate hikes “would be worthwhile,” Fed policymakers have said they will continue to shrink the central bank’s balance sheet by nearly $9 trillion, getting rid of $60 billion in Treasury bonds and $35 billion in mortgage debt each month.

But Powell said that for now, the Fed is content to shrink its balance sheet by simply allowing delinquent assets to be written off rather than being replaced. Fed policymakers have said in the past that they would also consider selling Treasuries and mortgage debt if necessary to speed up “quantitative tightening,” which would put more upward pressure on mortgage rates.

“We said we’d look into it as soon as the balance sheet got under way,” Powell said. “It’s not something we’re looking at right now, and it’s not something I expect to be looking at in the near future. This is what we will address, but the time for addressing this is not yet close.

With one measure of inflation, personal consumption spending projected at 5.4% this year and not expected to return to the Fed’s 2% target until 2025, Powell said Fed policymakers see no reason to be complacency in raising short-term rates.

“The longer the current bout of high inflation continues, the greater the chance that higher inflation expectations will take hold,” he warned. “We are guided by ensuring maximum employment and stable prices for the American people.”

Mike Fratantoni

Fed policymakers’ economic projections “indicate slower growth, a slow slowdown in inflation, and a federal funds rate likely to exceed 4 percent,” Mortgage Bankers Association chief economist Mike Fratantoni said in a statement. “The surprise for the market could be the average expectation that they can increase [short-term] to 4.4% by the end of this year.”

While some economists and bond market investors are betting that the Fed will have to slow rate hikes if growth halts, and possibly reverse them if the economy goes into recession, Powell seemed intent on cutting off such speculation. .

“So far, there is only modest evidence that the labor market is cooling,” he said. “There are fewer vacancies. Exits from their all-time highs. There are signs that wages may be flattening. Wage growth has declined, but not by much.”

Historically, the Fed has raised the federal funds rate by 25 basis points at a time when it wanted to slow economic growth. A basis point is one hundredth of a percentage point, so it usually takes four increases of 25 basis points to raise the federal funds rate by 1 percentage point.

Here’s how the Fed started the year by raising short-term rates by 25 basis points on March 17th. When that didn’t work, the Fed made a 50 basis point hike on May 5.

As inflation continues to defy expectations, the Fed has made three increases of 75 basis points at its last three meetings, June 16, July 28 and September 21.

Overall, the Fed has raised short-term rates by 3 percentage points this year and shows no signs of slowing down.

Before making small hikes, let alone halting rate hikes, the Fed would like to see “growth continue to lag the trend to see labor market movements indicating a return to a better balance between supply and demand, and clear evidence that inflation is returning to 2 percent.”

“In regards to rate cuts, we would like to be very confident that inflation comes back down to 2 percent before we consider it.”

In a note to clients, Ian Shepherdson, chief economist at Pantheon Macroeconomics, expressed surprise that the Federal Open Market Committee’s policy statement contained “no mention of a startling collapse in the housing market.”

Shepherdson said he now expects the Fed to pass another 75 basis point hike in the federal funds rate in November, but return to the more traditional 25 basis points in December.

“By November, the Fed will have another round of inflation data, and three more by December, and we expect all of them to be much better than they were in August,” Shepherdson said.

In their latest forecast Wednesday, Fannie Mae economists said they no longer expect mortgage rates to fall below 5 percent next year.

Mortgage rate cuts no longer predicted


Source: Fannie Mae Housing Forecast, September 2022

In August, Fannie Mae forecast that 30-year fixed-rate mortgage rates would peak at 5.2 percent this year and fall to 4.4 percent in the second half of 2023. 5.5 percent by the last three months of next year.

Economists at the Mortgage Bankers Association, in their September 19 forecast, predicted rates would peak at 5.5% in the second half of 2022 before dropping back to 5.0% by the end of next year.

Receive the Inman’s Extra Credit newsletter straight to your inbox. A weekly roundup of all the world’s biggest mortgage news and closures, delivered every Wednesday. Click here to subscribe.

Email to Matt Carter

Today Latest News Update

I have tried to give all kinds of news to all of you. latest news today 2022 through this website and you will love all this news very much because all the news that we always report in this news is always there. This is a hot topic, and whatever the latest news

we have always tried to contact you so that you continue to receive Electricity News, Graduation News, Donation News, Bitcoin News, Trade News, Real Estate News, Gaming News, Breaking News, Digital Marketing, Telecommunications News, Beauty News, Banking News, Travel News, Health News, Cryptocurrency news, claims news latest news and you will always get news information through us for free and also tell people. Specify that any information relating to other types of news will be

News live today

All these news that I made and shared for you people, you will like it very much, and in them we continue to offer topics for you people, like every time, so that you continue to receive news information, such as popular topics, and you. Our goal is to be able to receive

all kinds of news without passing through us, so that we can bring you the latest and greatest news for free, so that you can move on, getting informed about this news with you. In the future, we will continue

give information about more world news update today Types of breaking news through the posts on our website so that you always get ahead in this news and whatever information is there, it will definitely be passed on to you people.

World news today

All this news that I brought you or will be the most different and best news that you people will not receive anywhere, along with information Breaking News, Breaking News, Health News, Science News, Sports News, Entertainment News, Technology News, Business News, World News out of this, available to all of you, so that you are always in touch with the news, be ahead in this matter and continue to receive today’s news all types of news for free until today so you can get news while getting it. Always take two steps forward

Credit goes to a news site – This is the original content owner’s news website. This is not my content so if you want to read the original content you can follow the links below.

Get original links here🡽

window.fbAsyncInit = function () {
FB.init({
appId: ‘267158050139450’,
cookie: true, // enable cookies to allow the server to access
// the session
xfbml: true, // parse social plugins on this page
version: ‘v2.9’
});
};
// Load the SDK asynchronously
(function (d, s, id) {
var js, fjs = d.getElementsByTagName(s)[0];
if (d.getElementById(id))
return;
js = d.createElement(s);
js.id = id;
js.src=”https://connect.facebook.net/en_US/sdk.js”;
fjs.parentNode.insertBefore(js, fjs);
}(document, ‘script’, ‘facebook-jssdk’));
//load analytics.js
!function () {
var analytics = window.analytics = window.analytics || [];
if (!analytics.initialize)
if (analytics.invoked)
window.console && console.error && console.error(‘Segment snippet included twice.’);
else {
analytics.invoked = !0;
analytics.methods = [‘trackSubmit’, ‘trackClick’, ‘trackLink’, ‘trackForm’, ‘pageview’, ‘identify’, ‘group’, ‘track’, ‘ready’, ‘alias’, ‘page’, ‘once’, ‘off’, ‘on’, ‘timeout’];
analytics.factory = function
return function () {
var e = Array.prototype.slice.call(arguments);
e.unshift
analytics.push(e);
return analytics
}
};
for (var t = 0;
t < analytics.methods.length;
t++) {
var e = analytics.methods
analytics[e] = analytics.factory(e)
}
analytics.load = function
var e = document.createElement("script");
e.type = "text/javascript";
e.async = !0;
e.src = ("https:" === document.location.protocol ? "https://" : "http://") + "cdn.segment.com/analytics.js/v1/" + t + "/analytics.min.js";
var n = document.getElementsByTagName("script")[0];
n.parentNode.insertBefore(e, n)
};
analytics.SNIPPET_VERSION = "3.0.1";
analytics.load("qGZ5B2F63B1nZc50lU1XNNA9LOEVxt61");
}

}
();
analytics.ready(function () {
ga('require', 'linker');
ga('linker:autoLink', ['events.inman.com']);
});
(function(d, s, id) {
var js, fjs = d.getElementsByTagName(s)[0];
if (d.getElementById(id)) return;
js = d.createElement(s); js.id = id;
js.src = “//connect.facebook.net/en_US/sdk.js#xfbml=1&appId=1488799148013723&version=v2.3”;
fjs.parentNode.insertBefore(js, fjs);
}(document, ‘script’, ‘facebook-jssdk’));

Peter Kavinsky

Peter Kavinsky is the Executive Editor at cablefreetv.org

Recent Posts

  • News

Bella Hadid showed on stage “liquid dress”. Apparently this is the clothing of the future

The liquid dress was "born" for the public.A picture: GLOBAL LOOK PERSONBEE Paris there's another…

2 mins ago
  • News

Influenza and covid vaccination starts for older people

Granada (EFE) six months and six years. Health and Consumption Minister Catalina Garcia visited a…

3 mins ago
  • News

Chechen leader Kadyrov sends three teenage sons, one 14, to fight in Ukraine

Chechen leader and ally of Vladimir Putin, Ramzan Kadyrov, revealed that he sent his three…

5 mins ago
  • News

Mesut Özil had surgery in Başakşehir! Time away from the fields…

Breaking sports news: 33-year-old Mesut Özil, who played in Başakşehir, had a hernia surgery. It…

5 mins ago
  • News

Fearful hours in the village! Found like this

In Malatya, 90-year-old Makbule Karabulut, who was never heard from again after leaving home with…

7 mins ago
  • News

Comparing Cristiano Ronaldo’s first and second stints at Manchester United

Click Here to Watch this Event Live Online for Free! Cristiano Ronaldo's ill-fated season at…

7 mins ago