DEQ's
Rodkin on Taking Advantage of Low Interest Rates
Posted August 21, 2012, at 3:05 p.m.
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Deal Estate: The Blog is the online extension of Chicago magazine’s monthly “Deal Estate” column, which is written by Dennis Rodkin. On the blog, Rodkin—who has been covering the local housing scene for Chicago since 1991—provides timely updates on new homes to hit the market, recent high-end sales, and other residential real-estate news from the city and suburbs.
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And with our friends at CLTV's HomesPlus
Got a hot housing tip? Contact Rodkin at dennis@rodkin.com.
Follow Dennis on Twitter at twitter.com/dealestate
And with our friends at CLTV's HomesPlus
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This was a very misleading video. It is full of numerous innacuracies. 30 year mortgage rates are not tied to Fed Fund rates at all. They are tied to the MBS market (mortgage backed securities). There is also a general correlation with 10 year treasuries. But in no way tied to fed funds. In addition, rates move quickly and without notice. Mortgage rates, like stock move on economic indicators and it can happen in a minute.
JOECLOANS - I came down to make this exact same comment and noticed you'd already said it. Mortgage rates are definitely NOT tied to the Fed Funds rate. There are some correlations, yes, but they are in no way tied to the Fed Funds rate. The FF rate is the rate at which banks loan money to eachother overnight at the federal reserve.
If mortgage rates WERE tied to the FF rate, how can you explain daily fluctuations in mortgage rates, when the FF rate only can change after a FOMC meeting where they decide to change it?
Eileen, Joe: Forgive me. I was out of town when your comments posted, so I didn't see them at the time. They've just been pointed out to me.
Of course you're right. What I should have said was that movements in mortgage rates are associated with what the Federal Reserve does. I meant "tied to" in a looser way than it comes off. I misspoke, and I apologize.
I wrote about the common misperception that mortgage rates are directly connected to the Fed a few years ago. Here's that item:
http://www.chicagomag.com/Radar/Deal-Estate/January-2008/Housing-BulletinaWho-Benefits-from-Another-Fed-Rate-Cut/