Federal Reserve Policy And The Inflation Rate Come Into Focus

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Peoples Home Equity gives opinion on the coming Federal Reserve meeting as well as inflation report by the U.S. Bureau of Labor Statistics.

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Americans may not realize how low inflation is right now

Peoples Home Equity is gearing up to watch what unfolds within the Federal Reserve policy meeting starting Wednesday, December 17th. The meeting is very important for the housing market because it concerns the coming shift in power of the Fed, and most importantly, the scaling back of its quantitative easing program known as QE3. Tuesday will also be important for lenders since the U.S. Bureau of Labor Statistics will release the year-over-year inflation rate for November which can also have an effect on housing prices.

FOMC Meeting
Federal Reserve will soon experience a transition from Chairman Ben S. Bernanke with soon to be successor current vice chairman Janet Yellen. The statements vice chairman Yellen will make over the course of the meeting will carry perhaps just as much weight as those of Ben Bernanke since she is almost certainly going to be given permission from the senate to take over command. Current chairman Bernanke will relinquish his duties of heading the Fed when his term concludes at the end of January. The discussion of when the Fed plans to taper its QE3 program will be the focus of most market participants; in fact they will be scrutinizing all statements made by Fed officials in the objective of seeking a specific date or period of when the taper may occur. Thus, statements that Vice Chairman Yellen makes during the Fed meeting on December 17 and 18 will carry much weight since she will most likely be in charge when QE3 becomes scaled back. When QE3 finally decreases its asset repurchase program, interest rates, and subsequently mortgage rates, will rise dramatically in a short period of time. Thus, Peoples Home Equity is strongly encouraging all prospective home-buyer to apply and get approved for a home loan now while mortgage rates remain reasonable.

Inflation Rate
Americans may not realize how low inflation is right now. Peoples Home Equity points out that for October 2013, the year-over-year inflation rate hit a 6 year low of just 1%, according to TradingEconomics.com. This inflation figure was the lowest recording since October of 2009, and its taming mortgage rates from rushing higher! The lender considers the market lucky to have seen the price purchasing index (PPI), another measure of inflation for producers only, not to have reached record highs in November. Based on the recent PPI data, Peoples Home Equity expects Tuesday’s inflation report to be the same if not higher than 1% as it seems unreasonable for inflation to go lower. Home buyers should protect themselves from a taper the Fed’s stimulus program, or an inflation report pushing the positive trend in mortgage rates even higher. In other words, obtain a fixed rate home loan now before it’s too expensive!

Please contact Peoples Home Equity loan officer today for HARP loan details at: (855)-897-0300

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