Fed Minutes: Mortgage Rates React

The Federal Reserve’s minutes of the last meeting came out yesterday and it was revealed the Federal Reserve will continue to inject money into the economy to spur economic growth in the form of quantitative easing.

The Fed meeting minutes also revealed they are positioning themselves to be in lockstep coordination with the financial markets. By being in sync with the financial markets, the Federal Reserve can control market reactions and make executive decisions accordingly.

This news aligned itself with furthering the positive trend in mortgage interest rates. Yesterday mortgage interest rates improved by 25 basis points keeping pressure on rates rising upward.

Mortgage rates reacted positively to the minutes of the Federal Reserve’s Minutes.

The market ended with the S&P 500 down -4.94, Dow Jones down -53.59 and the NASDAQ being down -1.86. The news of the Fed’s minutes cause the stock market to sell off and that money that was parked in stocks was moved into mortgage bonds driving high mortgage yields lowering mortgage interest rates for consumers looking for home mortgage loans.

The average 30 year fixed rate mortgage is now back nearer to 4%. This flow of money has caused mortgage rates to react favorably for consumers looking for the most competitive terms of financing available.

Following are some indicators the Federal Reserve is concerned about:

  • Federal Reserve’s concern on employment remains too high
  • Federal Reserve’s concern economic growth sluggish due to weak housing sector
  • Federal Reserve’s concern that stock market consumption has slowed down
  • Federal Reserve’s concern central banks of Japan and England have announced expansions of their asset purchase programs.

The meetings minutes was adjourned by the Fed’s stance that they will be ready to act if they feel the economy is not in lockstep with price stability and full employment. Price stability is typically an inflationary pressure which the Federal Reserve looks at with a fine tooth comb.

What will happen with mortgage rates from the Fed’s meeting as we move forward?

Mortgage rates for purchasing or refinancing for Santa Rosa and the remaining Sonoma County areas will likely fall between 4.125 through 4.5% on 30 year fixed rate money. Rates of course are subject to change, but what the likelihood of further pressure on the stock market, coupled with high unemployment and weak economic growth, these are all signs mortgage rates will remain low for quite some time.

Get a free mortgage rate quote for your purchase or Santa Rosa mortgage. let’s discuss the feds minutes and how mortgage rates reacted.











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  1. […] improvement became short-lived as money began pouring into the bond market after news came of the Fed’s commitment to purchasing treasury securities to help lift the bond […]

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