Douglas Trudeau , Assoc. Broker
Prudential Foothills Real Estate
64 N. Harrison Road, Suite 160
Tucson , AZ 85748
Mobile: 520-954-2209
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Federal Market Committee Voted…
by Wayne Novak, Premier Mortgage Resources
As you probably know by now, the Federal Open Market Committee voted to cut the fed fund rate and the discount rate by 50 basis points each. The Fed said its decision to slash the key federal funds rate was aimed at preventing tighter credit conditions from taking a more severe toll on economy.
While the Fed’s super aggressive monetary policy decision has certainly spawned a handsome rally in the mortgage market — I think it is important to recognize two things; (1) the Fed has essentially abandoned its inflation fight in favor of stimulating economic growth, and (2) the Fed’s decision is driving the dollar dramatically lower on global currency exchanges. I have no intention of raining on anybody’s parade – and I certainly don’t advocate spending too much time looking a gift horse in the mouth. However, it is my job to add perspective to changes in the mortgage market for you, my client. Be aware that both of these conditions I’ve just described are absolutely not the “stuff” that dramatically lower mortgage interest rates are normally made of.
Hmm – anybody happen to notice that traders in the Treasury markets aren’t nearly as “stoked” about the Fed’s monetary policy decision as mortgage investors are.
Be patient – be disciplined – and play it by the numbers.
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Wayne…nice post. Check out this one and see if you can win some bragging rights…I think I linked it right. Gamble on the FED….you still have time for the next go round
September 19th, 2007 // Brandon Causey
Wayne, kudos to you for correctly reporting that the Federal Reserve Open Market Committee voted to cut the federal funds rate. I’ve read so many pseudo-ignorant blogs dealing with this topic on AR with headlines like “Bernanke Saves the Day” or some such nonsense.
I think a lot of people in this industry are clueless about where our laws come from and which Federal agencies govern our industry. My hat’s off to you for getting it right!
September 19th, 2007 // Eric Kodner
Wayne - Good job. Thanks for the guest post. Posted you, went to bed, woke up and two comments overnight. What a great first post. Keep em coming.
September 19th, 2007 // Doug
Wayne - Excellent.
The problem with everything in housing from Alt-A to JUMBO to the levering up of the CDO market and everything in between is one thing: Prices. Its not the rates and never was…
Bailout ben proved one thing yesterday; He is a shill for wall st. Maybe he sees something coming that we don’t… no one can be sure except the FOMC. A few things we do know…
1. The dollar is going to be absolutely debased and destroyed. We’ll see 40 in 10 months time.
2. The bond market said; “oh heck no” to ben’s plans. The curve steepened and rose on the long end. You know where your mortgage rates are set.
3. Oil is at, what, $82/barrel? Don’t worry that will be a bargain in a few months. We may have $100 a barrel in the next month.
4. We’re screwed and for the first time… I really wish this would just go away.
September 19th, 2007 // bobby joe