What the Latest Fed. Meeting Meant to the Market

It's been said there's a pot of gold at the end of every rainbow. Yet, after last week's regularly scheduled meeting of the Federal Open Market Committee, the Fed helped gold seem more "charmed" than ever. What happened, and what does this mean for home loan rates? As expected, last week the Fed decided to keep the Fed Funds Rate (which is the lending rate banks charge each other for the use of overnight funds, and it is used as a base rate that many other lending rates are based on) at 0.25%. The Fed also reiterated that economic conditions warrant keeping the Fed Funds Rate low for an "extended period".
But the Fed's Policy Statement was clearly more downbeat on the economy and showed greater deflationary concerns than the previous Fed Statement. It also gave the feeling that the Fed will jump in with more Quantitative Easing (QE) if necessary. QE means the Fed is prepared to create Dollars through Treasury purchases, which in turn causes the Dollar to weaken. And last week, in response to the Fed's statement, we saw precious metals like Gold and Silver move higher as a hedge against a weaker US Dollar.
But, the Fed's Statement is also significant because another round of QE by the Fed could mean continued good news for Bonds and home loan rates. What's more, last Friday, respected hedge fund manager, David Tepper, noted that the shift in the Fed's statement also puts Stocks in an almost "no lose" position.
Why is this? Should the economy improve, Stocks go up. But should the economy weaken, and the Fed jumps in with more QE, Stocks could also benefit because more QE alongside a weaker economy brings the Dollar index down, making our exports more attractive. This will greatly help large US multi-national corporations, which have a high influence on the major US Stock indices. The Fed clearly has some big decisions to make in the coming weeks and months to help ensure our continued recovery, and I'll be watching closely to see how Bonds and home rates are affected. Last week, for instance, Bonds and home loan rates ended the week about .125 percent better than where they began.
Another thing to note - there was a mix of housing news last week. Housing Starts rose 10.5% in August from July, which was above expectations and was the highest level in 4 months. Building Permits, a sign of future construction, gained 1.8% and were also better than anticipated. In addition, New Home Sales came in near expectations, while Existing Home Sales were slightly above expectations - but still 19% below the sales pace of a year ago. Also, the inventory of unsold homes was reported at an 11.6 month supply for existing homes and an 8.6 month supply for new homes. Remember: The level of improvement in housing is a big indication of the strength of our economic recovery.

Information provided by: Lyn Bankowski

Saving Money on Renter's Insurance

While most renters insurance is competitively priced, discounts are available. Be sure to ask your agent about these discounts. Most companies offer ways to reduce the cost of your insurance through a wide range of discounts.

Be sure to let your agent know if you have any of the following

• Smoke Detectors
• Deadbolt Locks
• Fire Alarm
• Antitheft Devices
• Sprinkler System
• Fire Extinguishers

Most companies also provide discounts when you package your auto insurance with renters insurance coverage. The discounts are usually between 10-25%.

By using Electronic Funds Transfers, you can save time and avoid the cost of postage for mailing your insurance premiums. The Electronic Funds Transfer billing fees are usually lower than regular payment plans as well.

Increasing your deductible is another way to save money on renters insurance. Increasing from a $500 deductible to $1,000 or $2,500 deductible can save.

Don’t be afraid to ask for discounts and let your agent know what protective devices you have in your home.

Search homes that are currently available for Rent in Oak Harbor, Wa.

contributed by;
Shelli Trumball
Cascade Insurance Agency