{"id":2529,"date":"2008-01-22T08:42:36","date_gmt":"2008-01-22T15:42:36","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=2529"},"modified":"2008-01-22T08:42:36","modified_gmt":"2008-01-22T15:42:36","slug":"amaze-your-friends-why-the-surprise-fed-funds-rate-drop-isnt-impacting-mortgage-rates","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2529\/amaze-your-friends-why-the-surprise-fed-funds-rate-drop-isnt-impacting-mortgage-rates\/","title":{"rendered":"Amaze Your Friends : Why The &#8220;Surprise&#8221; Fed Funds Rate Drop Isn&#8217;t Impacting Mortgage Rates"},"content":{"rendered":"<p><strong>Advanced Fiscal Literacy For Real Estate Professionals<\/strong><\/p>\n<ul>\n<li>The Fed Funds Rate is a fair proxy for economic health.\u00a0<\/li>\n<li>When the economy is growing, the FFR\u00a0rises to fight inflation.<\/li>\n<li>When the economy is slowing, the FFR\u00a0falls to fight &#8220;the absence of inflation&#8221; (i.e recession).<\/li>\n<li>If inflation is the enemy of mortgage rates, the absence of inflation is a friend.<\/li>\n<\/ul>\n<p>Mortgage rates have fallen since November because\u00a0the economy is showing few signs of inflation.<\/p>\n<p>Prior to this morning, markets expectations for the <a href=\"http:\/\/www.clevelandfed.org\/research\/policy\/fedfunds\/2008\/January\/18\/image1.gif\">Fed&#8217;s next action <\/a>were as follows:<\/p>\n<ul>\n<li>42% expected a 0.500%\u00a0drop (moderate weakness)<\/li>\n<li>38% expected a\u00a00.750% point drop (strong weakness)<\/li>\n<li>18% expected a 1.000%\u00a0drop (<a href=\"http:\/\/en.wikipedia.org\/wiki\/Magn%C3%BAs_Ver_Magn%C3%BAsson\" title=\"Magn\u00fas Ver Magn\u00fasson\">extra-strong<\/a> weakness)<\/li>\n<\/ul>\n<p>This morning, the Federal Reserve lowered the Fed Funds Rate by 0.750%.\u00a0 Mortgage rates are only down slightly.<\/p>\n<p>Here&#8217;s why:<\/p>\n<ul>\n<li>42% of people had to fix their bets lower on the economy because they didn&#8217;t expect weakness like this<\/li>\n<li>38% of people already expected this and priced it into mortgage rates<\/li>\n<li>18% of people had to fix their bets higher on the economy because they didn&#8217;t expect <em>strength<\/em> like this<\/li>\n<\/ul>\n<p>The slight movement is mortgage rates is the result of the (42 percent) and the (18 percent) shuffling their positions in mortgage bonds.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Advanced Fiscal Literacy For Real Estate Professionals The Fed Funds Rate is a fair proxy for economic health.\u00a0 When the economy is growing, the FFR\u00a0rises to fight inflation. When the economy is slowing, the FFR\u00a0falls to fight &#8220;the absence of inflation&#8221; (i.e recession). If inflation is the enemy of mortgage rates, the absence of inflation [&hellip;]<\/p>\n","protected":false},"author":14,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[26],"tags":[39],"class_list":{"0":"post-2529","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-lending","7":"tag-fed-funds-rate","9":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":761,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/761\/why-the-fed-matters-to-real-estate\/","url_meta":{"origin":2529,"position":0},"title":"Why The Fed Matters to Real Estate","author":"Dan Green","date":"December 12, 2006","format":false,"excerpt":"The Federal Open Market Committee meets today and will keep the Fed Funds Rate unchanged at 5.250%. It is not what the Fed does, however, that should concern Americans. It's what the Fed says. First, a clarification. The Fed Funds Rate is directly tied to Prime rate which impacts lines\u2026","rel":"","context":"In &quot;Enduring Interest&quot;","block_context":{"text":"Enduring Interest","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/enduring-interest\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":982,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/982\/peeking-into-bernankes-crystal-ball\/","url_meta":{"origin":2529,"position":1},"title":"Peeking into Bernanke&#8217;s Crystal Ball","author":"Brian Brady","date":"February 2, 2007","format":false,"excerpt":"Do you want to look into the crystal ball through the eyes of Federal Reserve Chairman, Ben Bernanke? Will that help you predict mortgage rates and housing prices for 2007? I try to outguess the Fed all the time and I've decided that we'll see a significant decline in short-term\u2026","rel":"","context":"In &quot;Real Estate&quot;","block_context":{"text":"Real Estate","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/real-estate\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":6152,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/6152\/the-fed-translated-3\/","url_meta":{"origin":2529,"position":2},"title":"The Fed Translated&#8230;..","author":"Tom Vanderwell","date":"December 16, 2008","format":false,"excerpt":"Release Date: December 16, 2008 The Federal Open Market Committee decided today to establish a target range for the federal funds rate of 0 to 1\/4 percent. What\u2019s up with the \u201crange\u201d of rates?\u00a0\u00a0 Well, they\u2019d look pretty foolish if they said they wanted the rate to be at .25%\u2026","rel":"","context":"In &quot;Lending&quot;","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":3284,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/3284\/mortgage-market-week-in-review-the-fed-translated\/","url_meta":{"origin":2529,"position":3},"title":"Mortgage Market Week in Review &#8211; the Fed Translated&#8230;.","author":"Tom Vanderwell","date":"June 27, 2008","format":false,"excerpt":"Hi all, I want to thank Greg and Teri and Brian and....everyone for the honor of being invited to hang out with such an esteemed bunch.\u00a0 I'm really excited about it and looking forward to working, talking and \"raising the bar.\" I'll do up a post next week telling a\u2026","rel":"","context":"In &quot;Lending&quot;","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":10486,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/10486\/a-disaster-for-democrats-yeah-but-what-about-the-rest\/","url_meta":{"origin":2529,"position":4},"title":"A Disaster for Democrats?   Yeah, but what about the rest?","author":"Tom Vanderwell","date":"December 3, 2009","format":false,"excerpt":"This is just ugly.....Let me attempt to explain.\u00a0\u00a0 Goldman Sachs came out with their economic forecast.\u00a0\u00a0 Here's a brief summary of it:Mediocre growth until late 2011.Unemployment peaking at 10 3\/4 in the middle of 2011.Extremely low inflation through 2011Low interest rates through 2011 (at least the ones the Fed controls.)So,\u2026","rel":"","context":"In &quot;Group Therapy&quot;","block_context":{"text":"Group Therapy","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/group-therapy\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2521,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2521\/in-the-business-of-personal-relationships-database-marketing-is-more-effective-than-seo-marketing\/","url_meta":{"origin":2529,"position":5},"title":"In The Business Of Personal Relationships, Database Marketing Is More Effective Than SEO Marketing","author":"Dan Green","date":"January 30, 2008","format":false,"excerpt":"Two years ago, NAR told us that 74% of people begin their home search online.\u00a0 What they didn't tell us, however,\u00a0what percentage of those people\u00a0write paper with the agent on whose site they began said search. This omission is an important one.\u00a0 Just because a person starts online doesn't mean\u00a0he\u2026","rel":"","context":"In &quot;Marketing&quot;","block_context":{"text":"Marketing","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/marketing\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/2529","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/users\/14"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/comments?post=2529"}],"version-history":[{"count":0,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/2529\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=2529"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=2529"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=2529"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}