Mar
19
2008
Fed Rate Cuts Will Lead to Lower Mortgage Rates
By Charles TurnerIt might but this reports my CNBC’s contributing editor Barry Habib says differently: Fed Rate Cuts Do Not Equal Lower
Mortgage Rates.
Stocks and bonds compete for money and when stocks like Fed rate drops money goes into the market like it did yesterday. Therefore bonds don’t do as well and mortgage rates don’t drop.Portland Real Estate Blog
Why the Fed’s rate cuts won’t help you
It seems odd, but these are extraordinary times. Normally, when the Federal Reserve cuts the rate at which it lends money to U.S. banks, those banks in turn cut the rates at which they lend money to citizens and companies for personal and commercial use. Simple enough. Yet in the past few months, banks have made three important changes in their usual practice:
They have not been passing all of their interest-rate savings to customers.
They have restricted lending only to most creditworthy, documented applicants.
They have cut the total amount they’re willing to lend.
We’ll see what happens. If it’s like the Fed’s last cutting spree in January it led to lower rates… for about a week, after that we had rates that were pretty much the same as they were a year before.
They have not been passing all of their interest-rate savings to customers.
They have restricted lending only to most creditworthy, documented applicants.
They have cut the total amount they’re willing to lend.
Seems to me that 2 and 3 are good practices, lessons learned from the bubble, yet the guy who wrote the article calls them “perverse” and “unfair.”
the guy who wrote the article calls them “perverse” and “unfair.”
The reason we got into this mess in the first place is because going with customers with good credit was unfair to minorities, who generally have worse credit. Of course now that things are back to the way they should be, there will be cries of unfair again.
The reason we got into this mess in the first place is because going with customers with good credit was unfair to minorities, who generally have worse credit.
Wow, a bigot, how enlightening. Yeah I’m sure you’re right, the “minorities” caused the housing bubble. Come to think of it, “they” were also responsible for the tech bubble . . . oh, and the Great Depression too. God they’re awful, aren’t they, minorities?
Hm. Namcalling and exaggerations. Generally the tools of the mentally weak when they have nothing to respond with. I said nothing untrue. Nor did I say minorities directly caused the housing bubble. Minorities did not cause the housing bubble. Cries of unfairness because of the inability of minorities to borrow caused credit standards to be loosened, leading to the bubble. If you need a lesson in history, I’d be happy to provide.
Here are two articles. If you can’t understand that attempts to increase minority homeownership contributed to the problems we face today after reading them, then you can’t be helped.
Assault on the mortgage lenders: in the name of racial justice, the Clintonites want the power to decide who gets a home of his own – efforts to impose regulations on banks to make loans even if applicants are not creditworthy (1993)
Closing the housing gap: Bush administration sets ambitious goal to increase minority homeownership; observers point to previous administration for model (2002)
Yes, I’m sure that the Wall Streeters and hedge fund managers who promoted the whole CDO market, while encouraging higher risk lending, were motivated by social and racial justice.
Yep, that sounds right.
Cries of unfairness because of the inability of minorities to borrow caused credit standards to be loosened, leading to the bubble. If you need a lesson in history, I’d be happy to provide.
Oh, boy that would be great! Could you please give me a lesson in history? Just post it right here, so we can all share in your wisdom. Thanks again, ________.
love, Tiffany
We are in a classic liquidity trap. Fed easing has failed and interest rates for loans will go up!
Krugman on the trap