Mortgage Applications Increase and the FMOC Maintains a Rate Target of 0% to 1/4%
The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey. Their survey showed an increase of 6.6 percent on a seasonally adjusted basis from 514.4 the prior. The MBA's Refinance index also showed an increase this week, the index was up 5.9 percent over the prior week.
The Federal Open Market Committee released their statement on economic activity today. In their Fed speak, they basically said the economy isn't tanking as fast, the credit markets have improved, spending by consumers is stabilizing, businesses are still cutting back on buying and employing people but inventories are down which is a good sign, the economy isn't going to recover that quickly but the government programs that have been put into place are having an impact and the economy should grow again.
Here is the FOMC statement:
"Information received since the Federal Open Market Committee met in April suggests that the pace of economic contraction is slowing. Conditions in financial markets have generally improved in recent months. Household spending has shown further signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit.
Businesses are cutting back on fixed investment and staffing but appear to be making progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.
The prices of energy and other commodities have risen of late. However, substantial resource slack is likely to dampen cost pressures, and the Committee expects that inflation will remain subdued for some time.
In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.
As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn.
The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted"