Wednesday, November 4, 2009

Members of the Federal Open Market Committee have begun their final day of monetary policy deliberations. A post-meeting statement is expected to be released at 2:15 p.m. ET.


Most analysts believe the Fed will end their meeting with a reaffirmation of the stance they have maintained since March of this year -policies to support the economy will stay in place for some time, even as signs of recovery mount. In particular the nation's central bankers are not expected to soften their commitment to hold benchmark interest rates exceptionally low for "an extended period of time."

It wouldn't do the Fed much good at this point to alter their message to the marketplace -- since inflation remains benign and the sustainability of the recovery is still in doubt, even as signs of domestic economic improvement begin to peek over the horizon. Look for this event to exert little direct influence on the trend trajectory of mortgage interest rates today.


The Institute of Supply Management, a non-profit association composed of purchasing and supply managers, reported their service sector index posted a reading of 50.6% in October - somewhat disappointing after September's 50.9%. Still, there was little in this report that was surprising or charged mortgage investors perspective for the growth prospects of the largest segment of our economy.


In a separate report the Mortgage Bankers of America said their seasonally adjusted aggregate mortgage application index gained 8.2% last week - a mark that is 60.1% higher than where it stood one year ago. Requests for refinance loans were up 14.5% while purchase money loan requests were down 1.8%.


FYI: Congress is working on a plan to extend tax credit support to homebuyers. The new language in the Senate would allow homeowners who have lived in their home for five of the past eight years and who earn $125,000 or less for individuals or $225,000 for couples to receive a $6,500 tax credit. First-time homebuyers would still be eligible for an $8,000 tax-credit. The tax credit would apply for homes under contract by the end of April, although buyers would have until the end of June to close on the purchase. The Senate is expected to vote on this measure by the end of the week. The House, which would have to approve the measure before sending it to President Obama for his signature, is expected to take up the measure next week. More on this story as it become available.