What Bernanke's latest speech means for mortgage rates

September 05th, 2012

Financial news at the end of August was dominated by a much-anticipated speech given by Federal Reserve Chairman Ben Bernanke in Jackson Hole, Wyoming. For all the coverage the speech received, it was actually lacking newsworthy content -- but in this case, no news is good news, at least for mortgage borrowers.

The upshot is that mortgage rates are unlikely to rise significantly in the near future, but they are also unlikely to go much lower. For anyone who has been thinking about buying or refinancing a home, this might be the right time to consult a mortgage calculator and figure out what your best move is.

Federal Reserve running out of moves

Financial market observers were so eager to hear Bernanke's speech because they hoped for hints of new stimulative measures to be taken by the Federal Reserve Board. Instead, Bernanke's speech focused on the history of what the Fed has done so far and the significance of the Fed's new communication strategies in signalling future policy. In short, it was a speech that was more about talk than action.

There's a good reason for this. The Fed is really running out of moves when it comes to lowering interest rates. As Bernanke recapped in his speech, the Fed first lowered short-term interest rates to near zero, and then undertook some extraordinary market intervention to lower long-term rates. With the latter now down around the historic rate of inflation, the Fed would seem to have done all that it can to pull interest rates lower.

Time to make your move

While the Federal Reserve may be running out of moves to make, this could be the right time for you to take action. If you have been contemplating buying a house, use a mortgage calculator to see how much house you can afford and focus on finding a property in that price range. If, on the other hand, you've been thinking about refinancing, use a refinancing calculator to see if you could save money at today's interest rates, after factoring in any fees and expenses associated with taking out a new loan.

The Fed has done pretty much all it can to bring interest rates down. That means it's time to stop waiting for rates to go any lower and take advantage of where mortgage rates are today.

Posted By :

Richard Barrington has earned the CFA designation and is a 20-year veteran of the financial industry, including having previously served for over a dozen years as a member of the Executive Committee of Manning & Napier Advisors, Inc. Richard has written extensively on investment and personal finance topics.

Budget deal leaves mortgage rates stable -- for now

October 23rd, 2013

The budget deal removes one potential disruption from the mortgage market, but don't expect rates to stay stable forever....  Read More

Mortgage rates caught in the crossfire of the fiscal showdown in Washington

October 16th, 2013

So far, the fiscal crisis has had a minimal impact on mortgage rates, but that could well change if the US government defaults on any obligations....  Read More

Shutdown squeeze play may cause mortgage fallout

October 09th, 2013

Showdowns over the federal budget and the debt ceiling threaten to put a damper on home prices and mortgage lending....  Read More

Latest figures reveal uptick in refinancing activity

October 02nd, 2013

An uptick in refinancing activity and the continuing rise in home prices show that refinancing opportunities still exist....  Read More

0 Responses to "What Bernanke's latest speech means for mortgage rates"

No Comments

Leave a Comment