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What Will an Obama Administration Mean to Mortgage Rates?

November 6th, 2008

By far, the dominant news story this week was the election of Barack Obama as the 44th President of the United States. While people have different ideological views on what this means to the nation, it is also natural to view any news of this magnitude through a lens of personal self-interest. For anyone contemplating buying a home, the question of self-interest that comes to mind is: what will an Obama Administration mean to mortgage rates?

Specifically:

  • What will be the impact of Obama on the current financial crisis?
  • What will be the impact of Obama’s long-range fiscal policies?

Looking at the recent news provides some perspectives on what the Obama Presidency will mean for mortgage rates, both short-term and long-term.

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Trick for Treat: Mortgage Rates Defy Federal Funds Rate Cut

October 30th, 2008

To much fanfare, the Federal Reserve cut interest rates on October 29th. That was supposed to be this week’s Halloween treat for the markets. The trick came the next day, when Freddie Mac’s survey of mortgage rates revealed that 30-year rates had risen sharply for the week. 

So what gives? A clue to why market rates moved contrary to the federal funds rate could be found in two other pieces of news:

For the time being then, despite the Fed’s actions, things got tougher for borrowers rather than easier. This highlights some realities of what the Fed can and cannot do.

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Inflation’s Long Roots Keep Mortgage Rates in a Holding Pattern

August 14th, 2008

Mortgage rates remained unchanged for the second consecutive week, as a troublesome reading on consumer prices neutralized growing optimism over falling oil prices.

Though the Consumer Price Index (CPI) measures a period which trails the recent declines in oil prices, the latest reading was a reminder of how difficult it can be to put inflation back in the bottle once it escapes. 

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Mortgage Fraud Crackdown A Good Sign for Industry’s Future

June 19th, 2008

What’s striking about recent mortgage news is how much of it is dominated by stories about investigations and indictments related to mortgage scams. Federal authorities have announced a nationwide crackdown, and local authorities have been active in many communities as well.

There were other, less dramatic stories on the mortgage front:

These other stories are worth reviewing, but ultimatly they are best put in context by the crackdown on mortgage scams.

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Federal Funds Rate, Federal Discount Rate, Prime Rate - what’s the difference?

March 17th, 2008

With all of the recent news regarding the Fed cutting rate, the Fed’s anticipated rate cut on March 18th, 2008 and some rates going up, it may be difficult to keep track of which rate we are all taking about. The Fed and the economic headlines often use the word “rate” to refer to a variety of interest rates that help steer the economy and provide liquidity to the credit market.

In most cases, whenever one uses the word “rate” and the Fed in a single sentence, they are usually referring to the Federal Funds Rate. Read the rest of this entry »