Ben Bernake, Federal Reserve Chairman, testified today that the economy is doing well with inflationary pressures in check. This has been taken by Wall Street that interest rates will remain stable or go lower.

Obviously, this will impact the housing market. Many have been sitting on the sidelines waiting for the combination of lower interest rates and pricing to stabilize. Additionally, those that have been in Adjustable Rate Mortgages will breathe a big sigh of relief as they will not be facing additional increases in their loans, and may be in a better position to trade their ARMs for a Fixed Rate Mortgage.

“It is yet another Bernanke driven rally,” said Marc Pado, chief market strategist, Cantor Fitzgerald. “He said the economy was doing well and refuted recent concerns that interest rates may rise.”
The economy would see moderate growth this year, Mr Bernanke said, adding that he saw signs of stabilisation in the housing market. That helped shares in homebuilders climb, with DR Horton’s shares up 1.3 per cent to $28.21. New Century Financial, the sub-prime mortgage lender, also gained 5.6 per cent to $19.63.
Mr Bernanke’s testimony came after the release of weaker-than-expected retail sales data earlier in the day. Sluggish demand for cars and electronic goods in January left retail sales unchanged from December.  via the FT.com

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