Fed Holds Rates; Refinance Boom Expected to Continue
Mortgage News from Quicken Loans
The Federal Open Market Committee (FOMC) decided for a fourth consecutive time to maintain the Fed Funds Rate, the overnight rate at which banks lend to each other, at 5.25 percent. This decision impacts consumers with adjustable rate mortgages, home equity lines of credit and credit cards. The Fed meets eight times a year and is scheduled to reconvene January 31.
"The Federal Reserve's decision to maintain the current Feds Fund rate comes as no surprise and continues the Fed's recent philosophy of allowing the bond market to dictate the market," said Bob Walters, chief economist for Quicken Loans. "Today's announcement is another indication that Chairman (Ben) Bernanke and the Fed board of governors believe current inflation is not at a problematic level but they intend to remain vigilant to ensure it does not become troublesome in the near-term.
"After 17 consecutive short-term interest rate increases beginning in June 2004, the Fed's decision to take no action over the last four meetings has given consumers a chance to leverage favorable long-term interest rates, which remain at their lows for the year, spurring a refinance boom that we expect to last well into the new year."
This article is reprinted by permission from Quicken Loans © 2006 Quicken Loans Inc. All rights reserved.
