AgentIndustry News

Fed caught in economic tug of war

Greenspan strategizes how to set 'neutral' cost of money

Inflation data and deepening worries about the Fed's intentions have taken mortgage rates higher again. A one-point loan fee (whether called "origination," or described in plain English) will still get a 5.87 percent 30-year rate, but the low-fee deals are almost to 6.25 percent, up from the March low at 5.37 percent. The adjustable-rate-mortgage market is worse: a point will buy a Fannie/Freddie 5-year at 4.62 percent now, more than a percent north of the March low. The largest purveyor of "portfolio" 5-year hybrids (Washington Mutual) appears to be pricing defensively, as a one-point fee produces a rate approaching 5.5 percent. We should have gotten some relief on word that 1st Quarter GDP rose only 4.2 percent versus expectations of near-6 percent, but the GDP internals included a further up-ramp of the best measures of inflation. The sub-1 percent, 1 percent-ish era has concluded, and given way rather briskly to a 2 percent annualized increase in the "core personal consumption ex...