Prime Rate

also known as the Fed, National or United States Prime Rate,
from the interest-rate specialists at www.FedPrimeRate.comSM

Friday, May 28, 2010

FOMC Meeting Schedule (Tentative) for 2011

Earlier today, The Federal Open Market Committee (FOMC) released its tentative monetary policy meeting schedule for 2011. The FOMC doesn't always stick to the exact dates on the schedule (hence tentative), but they do always meet at least eight times per calendar year.

Why is this schedule important to you? Because it's at these monetary policy meetings that The FOMC votes on whether to raise, lower or make no changes to The Fed Funds Target Rate, and when the Fed Funds Target Rate changes, the U.S. Prime Rate (also known as the Fed, national or WSJ Prime Rate) will also change.

Here's the tentative schedule for 2011:

January 26, 2011

March 15, 2011

April 27, 2011

June 22, 2011

August 9, 2011

September 20, 2011

November 2, 2011

December 13, 2011

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Friday, May 07, 2010

Futures Market 90% Certain U.S. Prime Rate Will Remain At 3.25% After The June 23 FOMC Monetary Policy Meeting

prime rate forecastWhich unemployment rate should we pay attention to? U-3 or U-6? U-3 is the headline or official unemployment rate, the one you hear when listening to business news. The Labor Department defines U-3 as:

"Total unemployed, as a percent of the civilian labor force"

Whereas U-6 is defined as:

"Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force"

U-3 is the headline, because it paints a rosier picture than the reality of the employment situation in the U.S. But why would you not take into account Americans who are unemployed, who need an income and who have given up looking for work? Makes no sense.

Here's how I see it. If you need an income, you're unemployed. If you have a job and don't have health insurance, you're unemployed. If you're working yet can't meet your most urgent financial obligations, like paying child support and your mortgage, then you're unemployed. That's why U-6 is the only gauge that matters.

Today the nation learned that the official unemployment rate (U-3) in the U.S. jumped from the January through March rate of 9.7% to 9.9% for April. The Labor Department put a positive spin on this by noting that the higher jobless figure was due to previously discouraged American workers getting off the couch and starting to look for work again. U-6 stood at 17.1% for April.

During April, American companies added 290,000 new jobs to their non-farm payrolls, while the new jobs figure for February and March were revised up to a total of 120,000.


It's been a while since we've seen the future market less than 100% certain that the Fed will keep short-term rates (including the U.S. Prime Rate) where they are, but it's still a safe bet that the Fed will remain on the sidelines for at least one more FOMC monetary policy meeting.

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As of right now, the investors who trade in fed funds futures at the Chicago Board of Trade have odds at 90% (as implied by current pricing on contracts) that the FOMC will vote to leave the benchmark target range for the Federal Funds Rate at its current level at the June 23RD, 2010 monetary policy meeting.


Summary of the Latest Prime Rate Forecast:
  • Current odds that the Prime Rate will remain at the current 3.25% after the June 23RD, 2010 FOMC monetary policy meeting is adjourned: 90% (very likely)

  • NB: U.S. Prime Rate = (The Federal Funds Target Rate + 3)

The odds related to federal-funds futures contracts -- widely accepted as the best predictor of where the FOMC will take the benchmark Fed Funds Target Rate -- are constantly changing, so stay tuned for the latest odds.

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Wednesday, May 05, 2010

Appealing Your Property Tax Bill

Property Tax
Property Tax
A tour around a typical American neighborhood reveals more “For Sale” signs than ever before. Reports further indicate that foreclosures will crest during the second half of 2010. And even more people now have mortgage loans that are actually higher than the home’s value. All this sums up to one hard fact: in most parts of the US property values are steadily decreasing.

Unfortunately, your annual property tax bill does not necessarily reflect this fact. Have you taken a close look at your assessment lately? If not, it certainly is time that you did just that. Many jurisdictions automatically increase property tax assessments by as much as 10% each and every year, regardless of property values.

Because most people with mortgages have their property tax bills escrowed they pay little attention to how much the mortgage carrier pays on their behalf. Don’t let this stop you from scrutinizing your property tax bill and moving forward with an appeal. Should the tax assessor rule in your favor, you will likely see reduced mortgage payments in the coming year, which is money in your pocket.

While doing some research is not required to state your appeal case to the local tax assessor, it certainly does not hurt. First, take a long look at your bill. It should list the “Fair Cash Value” of your home. If this number seems off the mark, contact the Assessors Office and ask for a detailed assessment of your property. Perhaps they have you listed as a 2-story when your home is a ranch, or they list an attached garage when yours is detached. You may also want to invest approximately $250-$400 and get an appraisal of your property. If you spend this small sum of money in order to get your property tax bill reduced by $1,000 or more it will certainly be money well spent. Further, if you have recently gotten refinanced or signed on for a home equity loan an appraisal would have already been done. Compare that paperwork against your property tax bill Fair Market Value to make certain it is within a fairly close range.

Next, make certain that if you occupy the home in question that the Homestead Exemption is taken into account. If you are a senior citizen, be sure that there is also a senior exemption.

Now that you have determined that your bill is too high, contact your tax assessor either by telephone or email. Explain to them that you would like to appeal your bill and ask them what process needs to be followed. In most cases there is a short form that needs to be completed and sent back to their offices. There should be no need to hire a real estate attorney or other professional to completely this process. In one afternoon and with very little effort you can see a huge return!

Astute property owner Jon Soderstrom of suburban Chicago has made it a policy for the past fifteen years to examine his assessment and appeal any undue increases. As Mr. Soderstrom noted, “I just told them there was no increase in property value therefore no increase in taxes was justified”. He went on to proudly announce that he has never lost an appeal.

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