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Lower Rates Mean what?!!!

By
Real Estate Agent with Coldwell Banker Snow and Wall Affiliate Broker 00301006

There seems to be a disconnect in the way the mortgage rates fluctuate and the actions of the FED.  To learn about the FED go here  http://www.barrysoard.com/about-the-fed.asp.

Some economists say that dropping the interest rate may have a negative affect on mortgage rates because it could cause inflation which could cause mortgage rates to increase.  Duh.  WHAT?!!!

The following comes from a press release released today (9/20/07) by Freddie Mac, arguably the biggest player in the mortgage industry.

McLean, VA - Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 6.34 percent with an average 0.5 point for the week ending September 20, 2007, up from last week when it averaged 6.31 percent. Last year at this time, the 30-year FRM averaged 6.40 percent.

The 15-year FRM this week averaged 5.98 percent with an average 0.5 point, up slightly from last week when it averaged 5.97 percent. A year ago, the 15-year FRM averaged 6.06 percent.  To see the full press release go to http://www.freddiemac.com/dlink/html/PMMS/display/PMMSOutputWk.jsp?week=38&ending=20070920

Is it any wonder with presidential elections coming next year we are seeing a "the sky is falling" hysteria in the economy of the United States.  After forty some odd years of watching the political process I have come to expect the onslaught of hype at the expense of our economy and the welfare of the citizens of the United States.

At any other time we would all be jubilant that the FED lowered the federal funds rate by a half a percentage point and would expect what we are seeing with the decrease from last years Freddie Mac thirty and fifthteen year fixed rate mortgages.  But, let's not forget, the sky is falling!

Comments (1)

Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate
Barry - What most fail to understand is that the federal funds rate does nothing to lower long term interest rates. Long term interest rates are tied to the bond market. The rates have gone up because the value of the dollar against other currencies has declined.
Sep 20, 2007 02:38 PM