07Oct2008
A look at the changes in real-estate lending rates
The past several weeks have been nuts for lenders. Just to show you what I mean, take a look at this Sept. 30 post to the Rain City Guide from mortgage broker Rhonda Porter.
Porter posts rates every Friday on Rain City Guide. She also writes the Mortgage Porter and posts regular live rate quotes on Twitter.
Last Friday’s rates post-bailout rate sheet wasn’t nearly as much fun to read, but it gives you an idea of the difference.
Check it out.
http://blog.seattletimes.nwsource.com/therealestatedeal/2008/10/a_look_at_the_changes_in_reale.html
Thanks for the mention on your blog. Rates actually improved yesterday–but not as much as we would expect with how the stock market nose dived.
We’ll see how the markets and mortgage rates react today.
Just finished listening to Federal Reserve Chairman Ben Bernanke. He sent a strong signal that officials may lower interest rates against a backdrop of waning price pressures.
jordan, when the FOMC lowers rates, it often causes mortgage interest rates to increase since it’s an inflationary move(lowering the Fed Funds Rate). Bonds react negatively to inflation.
Thanks Rhonda! For those unfamiliar with the FOMC:
About the FOMC
The term “monetary policy” refers to the actions undertaken by a central bank, such as the Federal Reserve, to influence the availability and cost of money and credit to help promote national economic goals. The Federal Reserve Act of 1913 gave the Federal Reserve responsibility for setting monetary policy.
The Federal Reserve controls the three tools of monetary policy–open market operations, the discount rate, and reserve requirements. The Board of Governors of the Federal Reserve System is responsible for the discount rate and reserve requirements, and the Federal Open Market Committee is responsible for open market operations. Using the three tools, the Federal Reserve influences the demand for, and supply of, balances that depository institutions hold at Federal Reserve Banks and in this way alters the federal funds rate. The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight.
Changes in the federal funds rate trigger a chain of events that affect other short-term interest rates, foreign exchange rates, long-term interest rates, the amount of money and credit, and, ultimately, a range of economic variables, including employment, output, and prices of goods and services.
Structure of the FOMC
The Federal Open Market Committee (FOMC) consists of twelve members–the seven members of the Board of Governors of the Federal Reserve System; the president of the Federal Reserve Bank of New York; and four of the remaining eleven Reserve Bank presidents, who serve one-year terms on a rotating basis. The rotating seats are filled from the following four groups of Banks, one Bank president from each group: Boston, Philadelphia, and Richmond; Cleveland and Chicago; Atlanta, St. Louis, and Dallas; and Minneapolis, Kansas City, and San Francisco. Nonvoting Reserve Bank presidents attend the meetings of the Committee, participate in the discussions, and contribute to the Committee’s assessment of the economy and policy options.
The FOMC holds eight regularly scheduled meetings per year. At these meetings, the Committee reviews economic and financial conditions, determines the appropriate stance of monetary policy, and assesses the risks to its long-run goals of price stability and sustainable economic growth.
For more detail on the FOMC and monetary policy, see section 2 of the brochure on the structure of the Federal Reserve System and chapter 2 of Purposes & Functions of the Federal Reserve System.