Today, the Federal Open Market Committee, the monetary policymaking body of the Federal Reserve System, decided to maintain the target range for the federal funds rate between 0 to 1/4 percent. The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals. They expect that interest rates near zero will push up the economy.
Currently, the FED is purchasing on a monthly basis $80 billion in Treasuries and $40 billion in mortgage-backed securities, which is helping to support low mortgage interest rates and housing demand.
To support the flow of credit to households and businesses, overcoming months the Federal Reserve will increase its holdings of Treasury securities and agency residential and commercial mortgage-backed securities at least at the current pace to sustain smooth market functioning, thereby fostering effective transmission of monetary policy to broader financial conditions. In addition, the Open Market Desk will continue to offer large-scale overnight and term repurchase agreement operations.
Home building, and housing in general, will be a leading element of the recovery, as foreshadowed by two months of gains for mortgage applications and better than expected newly-built home sales.
The Fed’s projections indicate an effective zero federal funds rate through 2022 but indicated that the long-run rate should return to 2.5% (beyond 2022). The Committee will closely monitor developments and is prepared to adjust its plans as appropriate.
If you want to find the current mortgage rates, click here.
Sources:
Federal Reserve issues FOMC statement
Federal Reserve: Accommodative Monetary Policy Will Continue for Years