As we continue our series on the KW Economic Report, this installment will focus on: Support for Economy

Source: federalreserve.gov

In its last meeting, the Federal Reserve maintained the current record low interest rate.

In a notably more positive report, the Fed sites signs of improvement but qualifies that the storm is not over yet. The interest rate roller-coastered over the past few weeks prompting suspicion of further action by the Fed to stabilize rates.

Walking the tightrope between the need for stimulus and the future potential for inflation, the Fed renewed its commitment to purchase $1.2 trillion in mortgage-backed securities by the end of the year rather than taking additional measures.

Since the Fed began purchasing these securities last fall, the interest rate on mortgages has fallen to historically low levels. Although they have recently resurfaced from below the 5% range, rates remain at exceptionally advantageous levels and are expected to stay low from the Fed’s purchase of additional securities.

Important to note is that mortgage rates are closely tied to long-term treasury securities, which are on the rise from the mounting level of U.S. debt.

These rates will likely rise as the level of government debt and spending rise.

Check back for the next installment in this series: Loan Modification Program.

Jennifer Mackay
850-774-6582
www.jennifermackay.com

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