Heard on the news that the Fed is expected to cut interest rates again in an
attempt to get money flowing and home mortgages written.

This doesn't make sense. Although it certainly would benefit buyers, why
would a bank be motivated to start issuing 30 year mortgages at record low
interest rates in the middle of a severe recession?

Wouldn't they rather ride out the storm and start writing mortgages when the
rates get higher again?

I don't understand economics.

Eisboch

On Mon, 8 Dec 2008 05:08:00 -0500, "Eisboch" wrote:

Heard on the news that the Fed is expected to cut interest rates again in an
attempt to get money flowing and home mortgages written.

A return to Greenspan economics.

Bernacke style.

This doesn't make sense. Although it certainly would benefit buyers, why
would a bank be motivated to start issuing 30 year mortgages at record low
interest rates in the middle of a severe recession?

I don't know this for a fact, but one of our friends who is a broker
told us the only agency writing mortgages now is the FHA.

What's that tell you?

A while back, when you were kind enough to help me out with that
handbook deal, my friend who has a high end, esoteric material machine
shop could book a 45 day deal with one of the local banks to finance
materials purchases - some of the materials he bought, alloys and the
like, were very expensive and a 45 day deal was perfect - .5% over 45
day LIBOR rate. Today, he can't find money anywhere. He's managed ok
by working supply financing deals with his long time suppliers who
want to maintain a solid business relationship, but the banks - forget
it. And this one particular bank he dealt with all the time just will
not lend him any money.

I don't get it either.

Wouldn't they rather ride out the storm and start writing mortgages when the
rates get higher again?

I think what they are hoping is that mortgages get written against the
potential of collateralizing them 5/10 years down the road. Also the
handling fees will go up.

I don't understand economics.

On Mon, 08 Dec 2008 05:58:14 -0500, Tom Francis - SWSports
wrote:

I think what they are hoping is that mortgages get written against the
potential of collateralizing them 5/10 years down the road.

Securitizing ?