Check out these graphs. The first one is courtesy of the Federal Reserve Bank of Saint Louis . It shows the average 30 year mortgage rates since 1970. I've marked the approximate dates of the Refi Boom; a time when some people would refinance their house 2 or 3 times over the course of A year.
The second graph (courtesy of Yahoo Finance) shows the 10 year treasury rates over the last 2 years. It corresponds with the shaded area of the top graph. Mortgage rates used to parallel the 10 year treasury pretty closely. Not anymore. No one really knows right now, how to predict the rates. You can see over the last 2 months how volatile the rates have been.
The 10 year Treasury is at it's lowest point ever. EVER! Lowest ever and it is threatening to go below 3%. But the 30 year mortgage rates are NOT at their lowest points ever. I underlined the lowest point from April, 2003 in green. You can see it is still a bit lower than today's rates, yet the 10 year is at record lows. Don't get me wrong, the 30 year rates are dropping. We might see record lows soon.
The Treasury rates are low, the Fed Funds Rates are low, so the Lending Institutions (the Banks) can pass along low rates to generate more loans, to generate more spending.... However, lately the Banks have been keeping the spread wider and trying to make up for their losses by pocketing that difference rather than passing it along to the borrowers.
AND they are begging for bailout money. It's a sick mess.
One thing I do know is that spending will help. Spend, spend, spend. As a family man, father, husband, provider, etc., I am inclined to save even more now to protect what I have in a rough economy. But this economy needs cash flowing. I guess we will see what this Holiday Season brings. I hope you buy everything you want for Christmas ; )
Oh, and if you haven't done so today already, be sure to google: Elephantitus of the Nuts
Stay Patient...
No comments:
Post a Comment