Lowell Real Estate Market Update 12/16/ 2013
Lowell Real Estate Market Update provided by Chris Tryon of ERA Key Realty Lowell
Buyer activety is starting to pick up again, which is odd for this time of year and the snow storms over the past week. It’s a great opportunity for buyers looking to buy a home in Lowell with interest rates still at historical lows.
However they could be going up soon?
Fed May Taper Soon
Stronger than expected economic data and progress on a budget deal in Congress caused investors to move forward their expected timing for the Fed to begin to scale back its bond purchases. This hurt both stocks and bonds, and mortgage rates ended the week a little higher.
Fed officials have revealed several conditions which will help them determine when to reduce their bond purchases. Recent economic events and comments from Fed officials suggest that those conditions may have been met. The performance of the economy may be sufficient to make Fed officials comfortable reducing the level of monetary stimulus. A broad range of recent economic reports revealed gains in the labor market, GDP growth, Retail Sales, and manufacturing. In addition, Congress moved closer this week to reaching a two-year budget deal. The proposed deal would reduce the level of uncertainty about fiscal policy, which is another concern of Fed officials. As a result, investors expect the Fed to announce in the near future that it will begin to taper its bond purchases, and some think that it may take place as soon as next Wednesday’s Fed meeting.
Congressman Mel Watt was confirmed this week as Director of the FHFA. The FHFA is the conservator over Fannie Mae and Freddie Mac and as such has tremendous influence over much of the mortgage market. Director Watt takes over from Acting Director Edward DeMarco whose last act was to raise the fee Fannie Mae and Freddie Mac charge borrowers to guarantee loans. Unless reversed by Watt, the fee increase will be effective beginning early next year and will result in an increase in most mortgage rates of about 0.10%
Busy Week Ahead
The next Fed meeting will take place on Wednesday. The statement is scheduled to be released at 2:00 et, and a press conference will take place at 2:30 et. Whatever indications Fed officials reveal about the timing of the taper likely will produce a significant reaction. The most closely watched economic data next week will be the inflation indicators and the housing market reports. The Consumer Price Index (CPI), an influential monthly inflation report, will come out on Tuesday. Housing Starts will be released on Wednesday, and Existing Home Sales will come out on Thursday. Industrial Production, Philly Fed, GDP revisions, Empire State, and Productivity will round out a busy week.
ERA Key Realty Lowell