Fed rate at lowest in history, virtually 0%

[nergee]

Well, at least we don't have to speculate on how much the FED
will lower rates at the next meeting.....

 

[ebaycj]

This is why the banks weren't lending. They knew that they had a pussy in charge of the Fed, and that if they held off long enough, they could borrow their money at 0.25% vs 1.0%. That's 0.75% more profit for them, for EVERY dollar they lend. Why wouldn't they hold off?

 

[walkur]

Well i'll be pumping more cash into the US economy in the next couple of days
Every time the dollar goes below(above?) the 1.40 I spend hundreds of ? 's at US webshops, since the (price difference) > (shipping costs+taxes)

example
US
dark knight blu-ray $24 = ?17
Netherlands
dark knight blu-ray ?30 = $42

 

[alchemize]

Originally posted by: Jhhnn

Originally posted by: alchemize
Pretty much the last resort is printing money and buying T-bills.

Hopefully a wave of refi's is going to take place which should help the mortgage mess and get houses moving again. Then we just have a regular old recession to deal with.

Explain how homeowners with negative equity refinance. I'd love to hear it. Same for Spidey's Heloc reference.

Housing won't start moving again until the remainder of the creative financing deals are flushed out of the system, until the 10 month backlog of unsold housing quits growing, and until prices fall even further.

People seem to think all this hubbub in the financial markets is about saving homeowners. Far from it- people who paid way too much at low rates are screwed one way or the other. Either they default, or make overblown payments until the market catches up to them somewhere down the road, maybe in a decade or so... So long as they're upside down, there's no refi, no heloc- forget it.

It's all about keeping the banks afloat long enough to beat the cash out of the investors who bought their bundled mortgage packages.

Homeowners lucky enough to have their mortgage still in the hands of the bank may get some wiggle room, some renegotiation to keep the cash flowing. Banks' treatment of mortgages they service on the behalf of investors is entirely different. They don't care- they can actually wring more money out of the investors when the homeowners default, because of the fee structure. It fattens their bottom line, helps 'em play catchup wrt the funky mortgages and derivatives they got stuck with when investors got wise...

I suspect that the vast majority of funkiness has been securitized, so, uhh, don't expect any mercy...

I'm having a little trouble figuring out how lowering the interbank rate is supposed to increase liquidity. If I can't make a profit lending to you, why would I bother taking any risk at all? Yeh, sure, it makes borrowing cheaper, but that doesn't matter if nobody is willing to lend...

I'm not concerned about people who made poor choices and are underwater. They need to be foreclosed on, because they can't afford the house they live in even with a lower mortgage rate! What's more important is to "restore liquidity" to home sales. Lower mortgage rates will help with that.

 

[StageLeft]

I do find it strange how these lowered mortgage rates, like 5% in MA (supposedly lowest in decades, says NPR) are going to substantially help people with their backs against a wall. Those rates are only available if you have good credit, and equity--one or both of which are lacking in those who are looking at foreclosure.

 

[ebaycj]

Originally posted by: Skoorb
I do find it strange how these lowered mortgage rates, like 5% in MA (supposedly lowest in decades, says NPR) are going to substantially help people with their backs against a wall. Those rates are only available if you have good credit, and equity--one or both of which are lacking in those who are looking at foreclosure.

Well, they also help by temporarily lowering the payments of people who have ARM's that are based on the fed funds rate. This is probably one of the reasons Bernanke is lowering things so quickly. It helps the people with bad ARM's, and it helps the people with good credit (who get to refi- really cheaply at 30 years fixed).

 

[umbrella39]

Originally posted by: shinerburke

Originally posted by: dmcowen674

Originally posted by: Naustica
Dollar dropped like a rock after the announcement which is positive for equities.

Between that and the oil production cut tomorrow, expect $200 very quickly.

I'll give you $200 to shut the fuck up for a week.

Take it Dave! Your silence could be lucrative.

 

[StageLeft]

Originally posted by: umbrella39

Originally posted by: shinerburke

Originally posted by: dmcowen674

Originally posted by: Naustica
Dollar dropped like a rock after the announcement which is positive for equities.

Between that and the oil production cut tomorrow, expect $200 very quickly.

I'll give you $200 to shut the fuck up for a week.

Take it Dave! Your silence could be lucrative.

Plus he can get 20 gallons of gas for that, seems like a win.

 

[AyashiKaibutsu]

Next stop negative rates! They'll PAY the banks to take government money and lend it.

 

[Vic]

My $0.02: First mortgage ARMs are almost never indexed to the Fed Funds or Prime rate (usually to LIBOR, T-bill, COFI, or MTA), and almost always have a "floor" which prevents them from adjusting lower than the initial rate regardless of how low the index goes. IOW, most mortgage holders are not going to see their interest rates adjust downwards because of this. New 1st mortgages are being offered at excellent rates (mid-5's) right now, but getting one requires positive equity, acceptable documented stable income, and good credit.

 

[Zebo]

I didn't know we had a liquidity problem but instead an over-abundance of debt instruments relative to wealth and income causing these problems. I mean who cares what the rate is if everyone is insolvent?

 

[alchemize]

Originally posted by: Vic
My $0.02: First mortgage ARMs are almost never indexed to the Fed Funds or Prime rate (usually to LIBOR, T-bill, COFI, or MTA), and almost always have a "floor" which prevents them from adjusting lower than the initial rate regardless of how low the index goes. IOW, most mortgage holders are not going to see their interest rates adjust downwards because of this. New 1st mortgages are being offered at excellent rates (mid-5's) right now, but getting one requires positive equity, acceptable documented stable income, and good credit.

So this will help the housing market - which right now is just bargain hunters, no?

 

[StageLeft]

Originally posted by: dmcowen674

Originally posted by: Naustica
Dollar dropped like a rock after the announcement which is positive for equities.

Between that and the oil production cut tomorrow, expect $200 very quickly.

Just so that we're clear, he's here referring to the cut that occurred today and was rewarded by the market with an 8% DROP in the price of a barrel of oil.

Feel free to lawl.