The recent stock market plunge related to dropping oil prices got a welcome boost with the release on Wednesday of the Federal Open Market Committee’s minutes from their last meeting.
The Fed commitment to make sure that the U.S. economy keeps growing, combined with foreign governments making in their own commitments to do whatever is necessary to help their respective countries avoid a return to a recession, gave investors much to cheer about on Wednesday and Thursday.
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The Fed has acknowledged that there is a chance they may have to move up their plan for raising interest rates if the economy gets a significant boost from the lower oil prices. However, the Fed reiterated to their commitment to make sure anything they do will not stifle economic growth.
With the price of oil having declined just about 50% in less than 2 months, consumers are seeing a lot of savings coming their way both at the pump and their home heating bills. This savings has the potential to spur economic growth significantly in the coming months.
Typically an announcement from the Fed about raising interest rates would be enough to scare investors and tank the market for a couple of days. However with this latest announcement the exact opposite happened.
Investors see the Fed’s comments as optimistic about the economic future in the U.S. which means that the stocks could start riding a bull market into 2015. No one knows for sure what is going to happen with the price of oil, but it seems likely that prices will not rise significantly in the coming months.
On the housing front good news was released on Tuesday that will make homeownership more affordable. President Obama announced that the Federal Housing Administration will be lowering the cost of their insurance by .50%.
This is will result in a significant savings to purchasers. This reduction comes on the heels of last week’s announcements by Fannie Mae and Freddie Mac regarding their new 97% financing programs.
The combination of the launch of all of these programs will make purchasing a home more affordable and attainable for many more first time buyers.
Do you have a news tip? Call us at (661) 298-1220, or drop us a line at community@hometownstation.com.In order for housing to truly recover, first time buyers must enter the market. These program announcements will increases a buyer’s purchasing power, and or make home ownership more affordable as more of a borrowers mortgage payment can go towards the purchase price of a home versus insurance for the loan.
Homebuilders, real estate professionals and the lending community all applauded these new initiatives.
Next week’s potential market moving reports:
- Wednesday January 14th – MBA Applications & Retail Sales
- Thursday January 15th – First Time Jobless Claims & Producer Price Index
- Friday January 16th – Consumer Price Index, Industrial Production & Consumer Sentiment
As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at 661-505-4300.