I tell clients that I’m much more comfortable predicting the past than the future. But there’s one financial spot in which you can do both! Freddie Mac in 1971 began a mortgage-rate survey upon which we all rely for historical reference. No other survey goes back so far, and the media report Freddie’s findings religiously each week. In the 1970s, to get a fair sample of rates across the U.S., Freddie had to telephone a lot of banks and S&Ls (savings and loans outfits). Freddie still does -- 125 banks each week. Which is nuts! Mortgages became bond-like by 1983, securitized into MBSs (mortgage-backed securities), which sold at the same prices on Wall Street no matter who the seller was, and thus retail rate dispersion among thousands of Main Street lenders collapsed into a narrow channel. (One of the mortgage market’s best-kept secrets: we all have pretty much the same deal.) By the 1990s and a gadget called the “internet,” you could teach a teenager to su...
- Freddie Mac in 1971 began a mortgage-rate survey upon which we all rely for historical reference.
- Freddie still telephones banks to get their rates -- 125 banks each week.
- Freddie does its phoning Mondays through Wednesdays, and releases the “news” on Thursday.
- Depending on the timing of real-time rate changes, Freddie’s survey-lag can produce comical results.