In a new piece called Fed Up, Again economics professor Steve Hanke makes his case for why the Fed must hike hike overnight bank-to-bank rates from .25% to 2% in order to end the credit crunch their existing low rate policy has caused. Below is an excerpt explaining the concept clearly using retail bank lending. [...]

Following the last Fed policy statement of 2010 (below), rates continue higher—30yr fixed 5% today vs. 4% on October 8—as mortgage and Treasury bond prices continue to trade lower on the 4 rate themes of recent weeks. The Fed noted that “the economic recovery is continuing” and that they’d continue the $600b+ Treasury buying (QE2) [...]

Following it’s sixth meeting of 2010, the Federal Open Market Committee voted to keep the overnight bank-to-bank Fed Funds rate at a target of 0-.25%, and the overnight Fed-to-bank Discount Rate at .75%. The statement (below) talks about ongoing threats to economic recovery, and mortgage bonds have rallied strongly (currently up 72 basis points) since [...]

Thomas Hoenig is a voting FOMC member who’s voted against keeping rates low at every Fed meeting in 2010. He gave a speech today providing his rationale for why he thinks U.S. monetary policy is too accommodative. The full speech is below—fairly dismal but all good points. His basic premise is that using loose monetary [...]

Mortgage bonds closed up 19 basis points today following a Fed meeting where they kept their low rate stance. Mortgage lender rate sheets didn’t decrease commensurately as lenders held the line ahead of a 10yr Treasury note auction Wednesday and a 30yr T-Bond auction Thursday. Lenders do this because longer-dated Treasury auctions compete with mortgage [...]

The Federal Open Market Committee voted today to keep the overnight bank-to-bank Fed Funds Rate steady at 0-0.25% and the overnight Fed-to-bank discount rate at .75%, citing subdued inflation that’s likely to continue for “some time.” For the fourth straight meeting in 2010, Kansas City Fed President Thomas Hoenig dissented on the belief that modest [...]

Rate Snapshot It’s quite surprising that rate volatility has been minimal for three weeks. As such, zero-point rates on 30yr fixed Conforming loans (up to $729k) held last week near record lows for a third straight week, and one-point rates on Jumbo loans (above $729k) remain steady in the low- to mid-5% range. Rates for [...]

Rate shoppers and watchers should note that the lowest rates on official record are here now. The chart below shows rates from June 2010 back to April 1971, when Freddie Mac started officially tracking 30 year mortgage rates. The high was in October 1981, when then Fed chairman Paul Volcker was hiking rates to battle [...]

Oil Down, But Are Gas Prices? Scientists say they have developed a car that can run on water. The only catch: the water has to come from the Gulf of Mexico. That aside, it is interesting how the price of oil has gone from over $80 per barrel down below $70 per barrel, and, as [...]

Last Day For Federal Tax Credit, CA Credit Still Live Today the $8,000 tax credit for first-time home buyers and the $6,500 tax credit for repeat home buyers expires. Service members, however, who were on official extended duty outside of the United States for at least 90 days between Jan.1, 2009 and May 1, 2010, [...]