The Fed raised the overnight cost of money last week for 10th time since last summer, to 3.5 percent; taking the prime rate, always three points higher, to 6.5 percent. The hike did no harm to fixed-rate mortgages, still about 6 percent, but did close what little gap remained between ARMs and fixed-rate loans. A market with no spreads leads to some goofy conversations with borrowers asking for quotes: "Young man, I asked for your rates on several different kinds of mortgages, and you say nothing but 'Six' over and over again. Are you deaf, or do you stammer?" Inclusive of loan fees, the one-year cost of any 30-year mortgage – jumbo, conforming, 1-year ARM, 3/1, 5/1, 7/1, 10/1, COFI option – is within a quarter-percent of 6 percent. As always, mortgages reflect Treasurys: yie...
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