Borrowers Getting Short End of The Stick

Rob Chrisman, a writer for The Basis Point, was featured in the San Francisco Chronicle in a story about how rates have not come down even as the Fed Funds Rate has plummeted.

Credit markets are still very jittery, but at some point the super conforming loans have to come down in price, or the stimulus they were meant to provide will be moot. But remember 2 things: first, mortgage rates are not tied to Fed Funds, they’re tied to mortgage bond prices. The exceptions are monthly adjustable ARMs and HELOC second mortgages. Second, FNMA only started purchasing super conforming loans from lenders on April 1, so this market hasn’t really even started yet. It’s going to take at least another month or two before it starts, but these rates will come down once there’s an actual market for the loans.