Economic Center Blog

This month, the Federal Open Market Committee (FOMC) will consider again whether to increase the benchmark Federal Funds Rate for a third time this year. As I stated when the FOMC was contemplating a rate increase earlier this year, increasing the short-term Federal Funds rate has little impact on longer term rates like the 30-year, fixed-rate mortgage. But, more importantly, the FOMC may start reducing its $4.5 trillion portfolio of bonds purchased during the global financial crisis through various rounds of quantitative easing (QE). Almost 40 percent of that portfolio is mortgage backed securities (MBS) that the Fed started buying in 2009. As explained by the FOMC in June, the “Quantitative Un-Easing” plan, could begin at any point this year with the reduction of $4 billion a month in MBS. The pace of MBS sales would increase by $4 billion each quarter up to a maximum of $20 billion per month.

With the Federal Reserve Open Market Committee (FOMC) meeting to decide whether to increase the Federal Funds rate in just a few days, the potential for an increase in mortgage rates dominates the housing news and industry chatter. Yet, changes to the short-term rate matter little to the housing market.

We invite you to browse the fourth quarter 2016 First American Real Estate Sentiment Index, which is based on a quarterly survey of independent title agents and other real estate professionals, providing a unique gauge on the real estate market using the crowd-sourced wisdom and expertise of real estate experts.

What a difference an election makes. Since the election, we have seen a pronounced increase in the popular 30 year-fixed mortgage rate. In the words of Federal Reserve Chairman Janet Yellen, financial markets expect that expansionary fiscal policy will accelerate U.S. economic growth and increase inflation. As a result, the 30-year fixed mortgage rate is now over 4 percent. In addition, the Federal Open Market Committee (FOMC) will likely announce this week a raise in the target range of the Federal Funds rate, from 25-to-50 basis points (bps) to 50-to-75 bps.

We invite you to browse the second quarter 2016 First American Real Estate Sentiment Index, which measures title agent sentiment on a variety of key market metrics and industry issues. In 2016, the survey has also tracked title agent sentiment regarding the implementation of the Know-Before-You-Owe rule, also referred to as the TILA-RESPA Integrated Disclosure (TRID) rule. It’s based on a quarterly survey of independent title agents.

With the upcoming Federal Open Market Committee (FOMC) meeting this week, many are wondering if an interest rate hike is in the works. According to the CME FedWatch Tool, the current market expectation of a 0.50 percent rate increase in June is extremely low – 4 percent. However, the likelihood jumps to 27 percent in July. But, whether the Fed raises rates in June, July or later this year, how much impact would it have on the current housing market?

This week, the Federal Open Market Committee (FOMC) is holding their March meeting where they could, just possibly, decide to increase the benchmark Federal Funds Rate again. According to one survey by CNBC, the vast majority expect rates to remain unchanged. In that same survey, nearly all the respondents believed a rate hike was likely in the June meeting.

It's the time of year when all economists worth a grain of salt (feel free to exclude me from that category) give their "forecast." Well, economic forecasters are about as correct as the local weatherman, unless you happen to be the weatherman in Southern California!

Will Janet Yellen’s Christmas gift to the housing market be a rate increase on December 16?  According to the CME Group FedWatch tool, the probability that the Federal Reserve will raise interest rates for the first time since 2006 is now over 80 percent.  For perspective, let’s think about 2006: the iPhone did not exist, MySpace was the leading social media network, and Twitter had yet to be launched.  So, yes, it’s been a while.

We’ve posted the fourth quarter 2015 First American Real Estate Sentiment Index, which measures title agent sentiment on a variety of key market metrics and industry issues. It’s based on a quarterly survey of title agents that do business with First American. More than 3,000 title agents from 50 states have participated in the first two editions of the quarterly survey. The fourth quarter survey was conducted in October 2015, and included a section measuring title agent sentiment on homeownership demand.