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Good Rules and Standards Coming



February 29, 2008 – Comments (1)

I worked in banks through a period where people lost their homes due to dramatic increases in interest rates.  The experience left me cautious about debt and to pay a bit more to ensure better financial security.  I wish I'd known what Greenspit had been up to as I'd have gone short terms the whole ride and I would have saved money.

However, today is probably a good time to follow the practices that I had followed.  I can't see how rates stay down and CR has a post showing them over the past two months.  Interestingly the 30 yr mortgage rate is about 1/4% higher, yet the feds have reduced rates by 2.25% in the past 6 months.

Lending standards are building risk back in and now standards for fair appraisals are being developed as Fannie Mae has new rules

Going back to fiscal reponsibility is a good thing.

1 Comments – Post Your Own

#1) On February 29, 2008 at 11:07 AM, cabuilderboy (81.19) wrote:

It is not that interesting that during periods when the Fed is lowering short term rates, mortgage rates rise. Experts like Barry Habib, MMG, have been writing about this for years. When the Fed abruptly raises rates over a short period, longer term bond holders sense too much easing will cause inflation, and longer term bonds (mortgages) rates begin to rise for the increased inflation expectation. Over a longer term, you are right, provided the whole interest rate complex is lowering as inflation expectations are diminished.

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