0 Bond Market Doesn't Like Tax Cuts: Mortgage Rates Spike

Bond Market Revolt

The US Treasury bond market reaction to the Fed’s QE policies and to this disgrace of a budget proposal was swift and severe. I have a picture of it for you right here.



That is what the bond market thinks of Ben Bernanke’s plan to spur inflation but hold down treasury yields.

The ovals show today’s bond-market reaction to the budget deficit that Bernanke will no doubt monetize as part of QE III and QE IV when this round of “quantitative easing” blows up in his face.


Conforming Mortgages Went From 4.00% to 4.50% in the last few weeks. This is not helping housing or the economy at all.

Jumbo Mortgage Rates have moved from 5.00% to 5.375% in the last two weeks in particular.

Interest rates are ultra-low by historical standards by any measure but we can clearly see what will happen if enormous deficits, high unemployment and a weak dollar are not addressed soon by the FED, Congress and ultimately by the american people.

Detail: Bond Market Doesn't Like Tax Cuts: Mortgage Rates Spike

0 MBA Report: Purchase Index at 12Y Low!

Rates can go to 3% but if someone isn't working, working part-time, or concerned about their career in this environment they aren't making an offer on a new home. I think the home buyer tax credit that expired and was renewed recently pulled demand forward resulting in a lack of buyers now. Realtors tell us that well priced listings are slowly selling but action has really slowed down in the last month. Is this simply the winter seasonal slowdown or is this another leg down for the economy at large? My guess is a double-dip recession after a disappointing holiday season. Expect another large jobs bill from congress before year end.

Detail: MBA Report: Purchase Index at 12Y Low!

0 How are Mortgages So Low and Can it Continue?

Detail: How are Mortgages So Low and Can it Continue?

0 You Don't Understand Mortgage Rates....

unless you are a seasoned Wall St professional, a mortgage banker or a CNBC junkie. Repeat after me:The FED doesn't move mortgage rates. This widely held belief came about over the last decade when the FED's moves would cause other debt instruments to move up or down.

Mortgage rates are set by the investors who buy the debt. Fannie and Freddie Mac who handle the conforming market repackage mortgages into 1 billion dollar pools. These pools are bid on and purchased by pension funds, insurance companies, banks, mutual funds, and foreign investors. Basically, any entity with a need to invest in safe debt instruments.

The investors are having a bit of a revolt right now because of inflation(out of control), the falling dollar, an ineffective FED that can't cut it's way out of the deflation and deleveraging that is happening in every sector of the credit markets. Credit is the life blood of the economy. Credit is dramatically contracting because investors are losing faith in the debt and US government policy in general. As an easy example, the FED is at 3.00% right now, since they cut, the national average rate on a 30Y conforming mortgage has moved up to 6.75% from 5.875%. On the jumbo mortgage side the rates for a 30Y fixed jumbo have moved from 7.00% to 7.875%. The adjustable mortgage products continue to be much more attractive.

Be careful in wishing for FED cuts. They are trashing the dollar, creating hyper-inflation and investors aren't stupid. They see the FED can't do anything to stop the credit/leverage meltdown. The easy days of having an 800 FICO and confidently knowing you could get a loan have passed. Credit is tightening daily. Until the losses stop we expect guidelines to get tighter. I encourage you to explore your loan options now if you need to refinance anytime in the next 2-3 years. The investors may not be around when you need them to fund your loan or the rates will be well north of your expectations. The money comes from somewhere and that money is running scared.

Here is the Bloomberg piece that inspired this lecture.

Agency Mortgage-Bond Spreads Rise; Markets `Utterly Unhinged'
By Jody Shenn
March 6 (Bloomberg) -- Yields on agency mortgage-backed securities rose to a new 22-year high relative to U.S. Treasuries as banks stepped up margin calls and concerns grew that the Federal Reserve may be unable to curb the credit slump.
The difference in yields, or spread, on the Bloomberg index for Fannie Mae's current-coupon, 30-year fixed-rate mortgage bonds and 10-year government notes widened about 21 basis points, to 237 basis points, the highest since 1986 and 103 basis points higher than on Jan. 15. The spread helps determine the interest rate homeowners pay on new prime mortgages of $417,000 or less.
The markets have become ``utterly unhinged,'' William O'Donnell, a UBS AG government bond strategist in Stamford, Connecticut, wrote in a note to clients today. A lack of liquidity has ``led to stunning air-pockets in price levels.''
Investors are realizing that banks have little room to make new investments amid rising losses and a flood of unwanted assets, said Scott Simon, head of mortgage-backed bonds at Pacific Investment Management Co. The world's top banks have reported more than $181 billion in asset writedowns and losses, been stuck with $160 billion of leveraged buyout loans, and bailed out $159 billion of structured investment vehicles.
``Everything is telling you the financial system is broken,'' Simon, whose Newport Beach, California-based unit of Allianz SE manages the world's largest bond fund, said in a telephone interview today. ``Everybody's in de-levering mode.''
Agency mortgage securities outstanding, which are guaranteed by government-chartered Fannie Mae and Freddie Mac or federal agency Ginnie Mae, total almost $4.5 trillion, about the same size as the U.S. Treasury market
No Savior
The widening spreads prompted speculation the government may step in to support securities guaranteed by Fannie Mae and Freddie Mac, said Tom di Galoma, head of U.S. Treasury trading in New York at Jefferies & Co., a brokerage for institutional investors. The Treasury Department said the rumor isn't true.
``The Fed can't really save the mortgage market,'' di Galoma said. ``As they keep cutting, mortgage rates aren't going lower.''
The spread of current-coupon fixed-rated securities guaranteed by Ginnie Mae against 10-year Treasuries has climbed 55 basis points this month to 205 basis points, also the highest since the 1980s, according to Bloomberg data. Debt guaranteed by Ginnie Mae is explicitly backed by the U.S. government, and based on loans already insured or guaranteed by its agencies. A basis point is 0.01 percentage point.
Carlyle Margin Call
Carlyle Group's publicly traded mortgage bond fund, which raised $300 million in July and used loans to buy about $22 billion of agency mortgage securities, failed to meet margin demands and has received a notice of default. In margin calls, banks demand more collateral on their loans because of falling prices. Lenders have been imposing ``additional collateral requirements'' outside of margins call, Carlyle said today.
``The capital issues at commercial banks are making them, in general, reluctant to lend, so lending is either harder to find or when you do find it, it's more expensive or the other terms are more-limiting.'' Steven Abrahams, an analyst with Bear Stearns Cos., said in a telephone interview yesterday.
``If there's less money to finance positions and less balance-sheet available to warehouse positions, the markets are going to become more volatile,'' he said.
Carlyle Capital Corp. missed four of seven margin calls yesterday totaling more than $37 million, the Guernsey, U.K.- based fund said today in a statement. Thornburg Mortgage Inc., the Santa, Fe, New Mexico-based owner of ``jumbo'' mortgages and securities backed by adjustable-rate loans, said yesterday it received a default notice from JPMorgan Chase & Co.
Next to Blow Up
``The single biggest concern right now is who's the next hedge fund to blow up, and how big are they,'' Arthur Frank, the New York-based head of mortgage-backed-securities research at Deutsche Bank AG, said in an interview today. ``The more the market widens, the more likely it is that another leveraged player has to sell, so it does feed on itself.''
Bloomberg current-coupon indexes represent the average of yields for the two groups of bonds with prices just above and below face value, the ones that lenders typically package new loans into.
Prices for agency securities backed by adjustable-rate mortgages with five years of fixed-rates fell 0.63 percent this month through yesterday, according to Lehman Brothers Holdings Inc. index data. Fixed-rated securities fell 1.66 percent, according to the New York-based company. The various classes of collateralized mortgage obligations used to repackage agency bonds collectively have fallen 0.9 percent, according to Merrill Lynch & Co. index data.
``Traders are putting their phones down and backing slowly away from their desks,'' O'Donnell said today in a telephone interview. ``Relatively little'' agency mortgage-backed securities are being traded, Pimco's Simon said.

Detail: You Don't Understand Mortgage Rates....

0 FED Matters Little in Housing Meltdown.

Well, you’ve probably heard by now that the Fed lowered rates by .25. So what does that mean? A couple of points to think about:
1. What the Fed lowers is the shortest of the short term rates and it typically helps home equity loans but doesn’t matter much to mortgage rates.
2. Why did they lower rates? Because the financial markets are hurting and they needed to at least appear to help out the economy and the markets. Just this week (and it’s only Tuesday at 5:00) we’ve seen UBS announce $10 BILLION in writedowns (losses) and Washington Mutual announced $1.4 billion in write downs, laid off 3150 people and said, (I’m paraphrasing,) “We expect industry-wide volume in 2008 to be off 40% from 2006.” Both banks sought additional investments to shore up the balance sheets this weekend. UBS went to the Singapore Sovereign Wealth fund and an middle eastern investor for 10 billion and WAMU did a preferred stock offering at 2.5 billion. That shows you the degree of financial stress the world's largest banks are facing.
3. Will what the Fed did today help matters at all? I think the best way to describe it is sort of like putting a Mickey Mouse band-aid on a 6 inch gash in your arm. It doesn’t hurt, but it really doesn’t do much. The business world will benefit from cheaper borrowings (since prime is dropping) but the big problem in the economy (housing) won’t really be impacted.
4. Did the market like what it got, ahh, that would be a resounding no. Sort of like a little kid crying to his Mama, the Dow dropped almost 300 points in less than 2 hours.
Have you ever tried to push a string across the table? It’s hard to get it to move unless you are pulling it, isn’t it. Well, that’s sort of what The Fed is doing. They are using the tools that they have to try to save the market, but the tools that they have aren’t what the market needs, so they aren’t able to be very effective.

Detail: FED Matters Little in Housing Meltdown.

0 FED Cuts, housing continues downward spiral.

At 11:15a PST the FED announced a small rate cut of 0.25% this produced an immediate rally in stocks and a sell off in bonds. Most mortgage rates rose as the FED statement indicated that they were concerned about inflation. I know I see it throughout the everyday economy. Have you bought gas or groceries recently? Inflation is the enemy of the lender as it destroys the value of the money they receive over the life of the loan. The dollar fell following the announcement and oil spiked to a record high. Oil is traded in dollars so as the value falls relative to other currencies the price per barrel rises in general. Gas prices should follow suit in the coming days.

How does this matter at all to housing? Well, I would expect rates to remain somewhat range bound throughout the next few weeks. Any additional confessions of major losses by world banks on mortgage paper would result in a flight to quality that would push high quality mortgage rates down.

In other housing news that is sure to put pressure on prices is Citigroups announcement today that they will no longer do purchase money 2nd mortgages in CA. This is Citi's way of avoiding the meltdown in housing in bubblicious California.

Case-Shiller announced their August housing report yesterday. They produce the most widely respected index on housing. They track individual metros. Here is a breakout chart from Time Magazine. Some cities look like a roller coaster ride at Six Flags, enjoy:

Detail: FED Cuts, housing continues downward spiral.

0 Falling home values=NO refinance options for millions.

The collapse in home values is proceeding at an ever increasing pace. Sites such as Irvine Housing Bubble, Sacramento Area Blog, and Phoenix Flippers Blog highlight the collapse of values in the last year. Especially, within the last three months we have seen a big drop in appraised values. You say home prices aren't dropping much? Well, investors/banks don't care if Joe Six Pack has a home on the market for $800k as a comparable value for a person refinancing. What matters is what has sold in the last month and the amount of foreclosures moving prices in that micro market. This is causing severe problems for solid money good clients with perfect FICOs, documented income and reserves. The higher the loan to value, the higher the mortgage interest rate, and often mortgage insurance is required. Mortgage loans are not being done at 100% loan to value above 417k on single family homes. Folks with jumbo mortgage loans resetting in the near future should carefully examine their financial plans, the market reality and consider refinancing, selling or riding out their existing loan. Next year $700 billion dollars worth of mortgages reset to full market rates. This is not a subprime problem, this is a global credit crunch. Those who don't plan, plan to fail by throwing their future to the vagaries of the market. And now, back to Lisa with celebrity news to keep us distracted.

Detail: Falling home values=NO refinance options for millions.

0 Pain or Pleasure:Two Charts.

I present for your viewing pleasure or pain depending on your position in this market the latest mortgage reset chart and the foreclosure time table.

Remember that the foreclosures that are on the auction block or listed on the local MLS have been in process for many months. Word on the street is that lenders are trying to delay foreclosures in the "HOPE" that the borrower will be able to begin making the payments again. Seldom happens. The bulk of foreclosure filings won't occur in my informed opinion until 2009. The big resets of ALT-A(above subprime but below prime) occur in the period of 09-11. This will be very interesting, as these folks will reset to full market rates or if they are smart they would have refinanced their mortgage before the market rate reset.
We live in an instant society, unfortunately this slow unwind of Candyland prices will take years. Every bubble cheerleading pundit wants to say, "It's over and we go up from here." How long in your infinite wisdom will the unwind last? Comment, your opinion counts.

Detail: Pain or Pleasure:Two Charts.

0 Market Meltdown benefits the SOLID borrower.

With the large drop in the US stock market and the bank losses over the last few days we have seen a massive drop in mortgage rates for our clients. The loans with the biggest investor demand and best price improvements are for "money good credits." Low loan to value, high income, strong FICO and ample reserves. It is a flight to quality across the board. Investors in treasurys and mortgage backed securities only want the filet mignon. The ground beef they purchased from New Century, Ameriquest and these exotic NEGAMs are a causing Montezuma's revenge all over the bank balance sheet. They only want the rock solid risk scenarios because Wall St is in a state of fear as global financial firms one after the other come to the confessional with massive multi-billion dollar loan losses. Remember these are loans that started having trouble over six months ago that are in foreclosure or sold off as non-performing to another institution. From all the evidence we have seen these write offs and tightening of credit for riskier loans will continue unabated for at least 1-2 years. Here is an excerpt from the Wachovia call today courtesy of Calculated Risk.

"Much of the increase in non-performing loans and the losses are on loans in certain California markets that have experienced fairly steep declines in prices. Our delinquency call centers report that the primary reasons for borrowers struggling to pay are three fold. First is reduction of income or underemployment. Second is the assumption of additional debt from lenders other than Wachovia and thereby changing the credit profile from the origination of the loan. And third unemployment. We have seen some uptick in unemployment in some of these markets. Let me also point out that while the average current estimate at the appraised value of non-performing loans is 77%, there is $380 million in balances out of the total $1.7 billion where the current estimate of value is over 90%. Actually on that pool, averages in the high 90s, again reflecting the dramatic decline of house prices in certain markets. These particular loans have a low loan to value of just under 80% at origination. It's interesting to note here that problems in these markets, really for all lenders seem to be across the board without originating FICO, the type of loan or the property. Given our outlook for continued weakness in the housing market and possibility for slow income consumer sector, we anticipate loans on consumer mortgage book continue to increase over the next few quarters and that losses will be up albeit fairly modest charge operates. To manage the increase in loans in foreclosure, we have significantly increased our staff responsible for handling Oreo properties and working with delinquent borrowers. Prepare the property to sell and sometimes choosing to maybe take a somewhat higher loss on that sale rather than risk holding out for a top dollar opportunity that may or may not come down the road.” emphasis added

If you would like to subscribe to our Mortgage Market Update report send an email to mrmortgage at thegreatloan.com. Would prefer to put a link but then we would be too busy sorting through all the great deals for Viagra. Have a prosperous day.

Detail: Market Meltdown benefits the SOLID borrower.

0 Where will mortgage rates be in the coming years?

I often get this question from clients. Luckily, we just hired a mystic to forecast the mortgage interest rate climate for you. Previously, he worked for the local news in the weather department. So you know he must be rock solid with his forecasts. Seriously, no one knows. But, you can make an educated guess as to the overall direction. I would venture to say that mortgage rates and interest rates in general will be higher in the coming years. We are coming out of a period of Fed rates not seen since the 50's. Global investors are very unhappy with the falling dollar. This destroys their USD based returns. We have exported a large amount of debt both public and private. We saw the ten year reach 4.50% range recently which would usually have jumbo mortgages around 6.25% and conventional mortgages in the 5.75% range. This didn't happen as I believe investors/banks see a lot more risk in mortgage paper and will demand higher rates for the risk that has exploded in the last year. The weak dollar and the mortgage risk repricing makes me believe that rates will drift higher in the coming years.

Detail: Where will mortgage rates be in the coming years?

0 Why do mortgage rates move around daily?

1) What are mortgage interest rates based on? The only correct answer is Mortgage Backed Securities or Mortgage Bonds, NOT the 10-year Treasury Note. While the 10-year Treasury Note sometimes trends in the same direction as Mortgage Bonds, it is not unusual to see them move in completely opposite directions. DO NOT work with a lender who has their eyes on the wrong indicators.

2) What is the next Economic Report or event that could cause interest rate movement?A professional lender will have this at their fingertips. For an up-to-date calendar of weekly economic reports and events that may cause rates to fluctuate, email mrmortgage (AT) thegreatloan (DOT) com and we'll add you to our mortgage rates report. Can't post the address here because the spam bots would get it and we would be getting offers for prescription drugs and to help Nigerians with money exchanges.

3) When Bernanke and the Fed "change rates", what does this mean. and what impact does this have on mortgage interest rates? The answer may surprise you. When the Fed makes a move, they can change a rate called the "Fed Funds Rate" or "Discount Rate". These are both very short- term rates that impact credit cards, Home Equity credit lines, auto loans and the like. On the day of the Fed move, Mortgage rates most often will actually move in the opposite direction as the Fed change. This is due to the dynamics within the financial markets in response to inflation. For more information and explanation, just give me a call.

4) Do you have access to live, real time, mortgage bond quotes?If a lender cannot explain how Mortgage Bonds and interest rates are moving in real time and warn you in advance of a costly intra-day price change, you are talking with someone who is still reading yesterday's newspaper, and probably not a professional with whom to entrust your home mortgage financing. Would you work with a stockbroker who is only able to grab yesterday's paper to tell you how a stock traded yesterday, but had no idea what the movement looks like at the present time and what market conditions could cause changes in the near future?

Detail: Why do mortgage rates move around daily?

0 The FED cut and rates are higher?

As clients are learning, mortgage rates are higher now than last week, back up to 6.5 percent for vanilla 30-year and 7% for Jumbo mortgages. Yes, higher.
Federal Reserve Chair Ben Bernanke probably has the same frustrated shoulder sag that we do: he played this thing exactly right, and has gotten nothing for his trouble but a run on the dollar.
The Fed's 0.5 percent was actually two quarters: the federal funds rate had been trading near 5 percent, 0.25 percent off-peg, for a few weeks. That was an inter meeting ease not formalized, a deft piece of central banking: if formalized, and then the crunch dissolved by itself, the Fed would have had to execute an embarrassing formal reversal. Instead, Sept. 7 news of sinking payrolls (an economic fade additional to and independent of housing and the crunch) made it easy to cut. At this moment the economy receives some dinky benefit from the cut (Construction money is 0.5 percent cheaper -- wanna build a house? Short-term rates are down -- how about a nice new neg-am pre-pay-penalty ARM? No?), but the crunch is still in place, especially in Mortgageland.

Other benefits have been cancelled as well. The 10-year T-note, driver for all long-term credit, has soared from 4.35 percent to 4.62 percent. The dollar run has been to the euro (now all-time high vs the dollar at $1.41) and to hard assets: gold at a 27-year high $744 and oil at one moment yesterday $84.

A great deal of domestic money has joined the run, buying into the fingernail-on-blackboard theorizing: there was no reason for Fed action; it guarantees a resurgence of inflation; it's just Bernanke's Put; and all bailouts all the time are bad.

This run has foreign fingerprints as well; Asia's currencies are dollar-pegged, but a race to hard assets is typical of our Persian Gulf friends and their several-trillion-dollar-hoard. Big currency moves often involve confidence, and it is disturbing in a time of financial crisis to find money running away from the dollar, the historical safe-haven. Confidence has aspects beyond interest rates and inflation: at some point, the average Persian Gulf observer of U.S. leadership, present and forthcoming, might well conclude that we don't have the good sense that Allah gave to the camel.

I like a good chart to see what happened in the past to see if it can give a little insight into the fog the future. Below is a chart of the U.S. dollar index which is our currency vs a basket of foreign currencies(Euro, Yen, Pound, Australian Dollar, etc.). Immediately below is the chart of the 10Y Treasury rates during the same period. In order to strengthen the dollar, rates need to rise to attract investment and/or taxes need to be reduced to drive growth. Taxes were cut during the early 80's, the growth engine revved up and interest rates dropped dramatically. I don't think with medicare, social security and a war machine at full speed the government can lower taxes. The FED is in a bind. The hope is that as they trash the dollar, this expands our export economy. Reviving growth, increasing tax receipts and paying back all the treasure we borrowed over the last few years. The US government owes 8.9 trillion dollars in bond money.

I believe rates across the board will need to rise in order to attract investment in our economy and to encourage investors to buy mortgage/ government debt. What's your take? I'm sure Bernanke and the new President could use you in Washington the next few years to sort out the problem.

Detail: The FED cut and rates are higher?

0 The Thrill is Gone.

Mortgage Rates are trading higher again this morning. The euphoria has worn off from Tuesday's rally following the interest rate cut. Traders have now assessed the long-term negative effects of the sinking Dollar and have begun selling into the market.The US Dollar has been falling against foreign currencies. This is inflationary because it takes more Dollars to buy foreign imports, which is effectively the same thing as a price increase.Bond prices may continue to drift lower throughout the day, pressuring home loan rates higher. For today, I would advise sticking with a locking bias.

Detail: The Thrill is Gone.

0 What's the cost of the interest rate drop to you?

Have you seen the value of your hard earned dollars? I remember as a child traveling to Mexico struggling to figure out how many thousands of pesos I had to get from my pocket to buy ice cream. The U.S. dollar has not collapsed to that degree but its value has declined dramatically in the last five years. An empire can't wage war and spend like a drunken sailor forever. Eventually, the currency suffers. How does this matter to you? Well as a starter, do you buy gas? Two reasons why it's $3 a gallon is rising global demand and the falling dollar. Oil is traded in dollars and the middle east pegs their currency to the green back. They are demanding more dollars because each month because they are worth less relative to other currencies.

In order to protect the dollar the FED would have had to keep rates steady on Tuesday. They chose to bail out speculative investors(hedge funds, investment banks, and leveraged buyout shops) and hope it trickles down to Joe Six Pack. Investors around the world could end up demanding higher interest rates on our government and mortgage debt.

We have seen the rate on the ten treasury and mortgage paper drift higher today. Just one day after the cut. This could result in much higher mortgage rates in the coming years. I believe fixed mortgage rates are a tremendous value and I think people will look back at 6-7% FIXED as the cheap money years. Have you traveled recently and seen the value of your bucks? Has your business been hurt or benefited from a falling dollar? Comment and you may win a free ice cold Sam Adams. Can I pay for it in EUROS?

Detail: What's the cost of the interest rate drop to you?

0 The FED drops rates, mortgage rates drop, right?

Clients have been asking on a regular basis what effect the Federal Reserve's expected rate cut will have on mortgage rates. Mortgage rates have rallied for the last month for prime borrowers because of the slowdown in the economy and the flight to quality. Investors around the world have made a clear decision and their appetite is only for mortgage loans extended to very well qualified clients in the jumbo mortgage market or FANNIE MAE paper on the conforming side because it has an implied U.S. government guarantee.

Essentially, risk based pricing has returned to the mortgage space. In a small way the Fed's action influences rates around the world. Most nations have a central bank or monetary policy board and react to local/global conditions to set policy. Europe has the European Central Bank whic primarily influences LIBOR which is the index used for almost all corporate lending and found in the majority of adjustable rate mortgage products in this country. If the Fed doesn't cut .50% I would expect mortgage rates to drift higher and the U.S. stock market to take it on the chin. Let's see what happens tomorrow.

How are short- and long-term interest rates different?
The Federal Reserve Board controls the federal funds rate. The Federal Reserve Board (Fed) has the power to raise or lower the federal funds target rate (Fed funds rate), which in turn influences the market for shorter-term securities. The Fed funds rate is the rate banks charge other banks for overnight loans. The Fed may raise the rate to keep inflation in check or lower it to stimulate the economy.
Long-term rates are market driven. Long-term interest rates, as represented by yields of the 10-year or 30-year Treasury bond, tend to move in anticipation of changes in the economy and inflation.

What causes interest rates to rise and fall?
Economic factors influence interest rates. Both short- and long-term interest rates are affected by economic factors such as inflation, the strength of the U.S. dollar and the pace of economic growth.
For example, strong economic growth can lead to inflation. If the Fed becomes concerned about inflation, it may attempt to cool the economy by raising the Fed funds rate, as it did in 2004 and 2005.
On the other hand, if the economy slows down, the Fed may lower the Fed funds rate to stimulate economic growth, as we witnessed in 2001-2003. Similarly, economic factors also affect long-term interest rates. For example, over the summer of 2003 and then again in the spring of 2004, long-term interest rates rose from historic lows as the economy showed signs of strength.
It should be noted that short- and long-term interest rates don't necessarily move in tandem. While short-term rates rose in 2004 and 2005, long-term rates remained relatively low.

Detail: The FED drops rates, mortgage rates drop, right?

0 Excellent Series of Greenspan Interviews Today.

Fortune magazine has published an excellent interview with Alan Greenspan. I would encourage you to watch the videos. Unfortunately, they can't be embedded. Here is the link:

Detail: Excellent Series of Greenspan Interviews Today.