AgentIndustry News

Despite Fed cut, mortgages now more expensive

Commentary: Did Bernanke make the right move?
Published on Sep 21, 2007

As incredulous clients are learning, mortgage rates are higher now than last week, back up to 6.5 percent for vanilla 30-year. Yes, higher. ("Sonny, you should be ashamed to try to trick an old lady! I still read the newspaper! You rotten crooks.") Federal Reserve Chair Ben Bernanke probably has the same frustrated shoulder sag that we do: he played this thing exactly right, and has gotten nothing for his trouble but a run on the dollar. The markets have been seized by Amateur Hour: inflation bears, gold bugs and the Buzz Lightyears of global growth. Doubly, triply frustrating -- they may be right. The Fed's 0.5 percent was actually two quarters: the federal funds rate had been trading near 5 percent, 0.25 percent off-peg, for a few weeks. That was an intermeeting ease not formalized, a deft piece of central banking: if formalized, and then the crunch dissolved by itself, the Fed would have had to execute an embarrassing formal reversal. Instead, Sept. 7 news of sinking payrolls (an ec...