The FOMC meetings for March came and went and as we mentioned it was a yawner. Yes, there were some post-meeting comments made but nothing that really shook the markets one way or the other and today stocks are regaining losses from earlier this year while the Dow turned positive for 2016. Analysts and investors alike had anticipated the Fed Funds rate would be closer to 1.25% by now but we’re still 0.75% away from that mark and Fed Chair Yellen gave the indication the Fed would tread lightly and remain dovish on rates. Apparently that has helped spark a tiny rally and is helping equities although the see saw we’ve seen this year doesn’t provide very much confidence the rally will continue.

The Fed mentioned that global events will still pose a risk to our economy and even drew back their GDP assessment for 2016 and 2017. The Fed adjusted their GDP estimates lower to 2.2% for 2016 and just 2.1% for 2017. This definitely indicates the Fed thinks there might be a gradual slowdown over the next several months yet they also indicated they thought there could be two more 0.25% rate hikes this year. Interestingly, markets reacted positively to this news or at least didn’t take it as bad as they would have maybe a year ago.

That said, industry analyst and mortgage banking veteran Barry Habib, CEO of MBShighway.com, a mortgage-backed security and rate monitoring service for lenders was quoted in an article today appearing in National Mortgage News.* Taking a contrarian view, Habib opined a rate bump by the Fed perhaps as early as June could very well spook equities which would drive investors to bonds, including mortgage bonds. He predicted if that happens the average 30 year fixed rate could fall to another historic low, perhaps to 3.00%. The record low was set in late 2012 when Freddie reported the average 30 year fixed rate touched 3.31%. That would be quite a move but Habib’s insight into the credit markets is well regarded in the industry.

*National Mortgage News “Contrarian View: Rate Hike Would Mean Another Refi Market” March 17, 2016