VA LOAN CAPTAIN BLOG & Learning Center

The Fed Speaks. Sort of.

By: Grant Moon 01/29/15 12:36 pm

At the conclusion of the most recent FOMC meetings, Fed Chair Yellen made a few comments that investors are trying to unravel. As usual, such comments are jaded with a touch of economic nuance but nothing that will ever come straight out and say, “Yeah, we’re gonna raise rates this July” or something similar. It’s almost comical how Fed comments, official or otherwise, never seem to be able to come directly to the point but keep traders guessing. For a while, the Fed did try that approach and they got burned. Remember when the Fed said they would begin easing when the unemployment rate hit 6.00%? Well, it did and they didn’t.

The Fed said yesterday they will continue to be patient as it relates to tightening. That can mean a lot of things but in general that probably means no earlier than Q3. For the next six months, you can expect VA mortgage rates to remain near current levels. And if you haven’t looked lately, you can get a 15 year VA mortgage at many places at around 2.75 percent without any points or origination charges and maybe even a little bit of lender credit to boot.

There seems to be no fear as it relates to inflation as the price of energy will hold back prices from transportation to consumer goods to gasoline. The Fed has a target inflation rate of 2.00 percent and at this pace that 2.00 percent might be hard to reach as prices continue to fall. If you’re in a situation to lock in a mortgage rate today it’s probably a good time to do so. Not locking in runs the risk of rates moving in the wrong direction. If you’re still a ways away from locking in anything, the pundits are telling you not to worry too much. With rates where they are right now with the Fed’s hands tied, you’ve got some time.

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