Month: December 2008

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Fed cuts rates to zero

The Fed cut federal funds target rate to near zero, down ~1%. The rate was 4.25% last December, and 5.25% Dec. 2006


The announced cut affected short term rates, and things tied to the discount rate, like prime-rate and charge card interest. It didn’t effect mortgage interest rates per se but other Fed activities have, namely, purchasing (and announcing the purchase) of treasury notes, bills, and bonds. Mortgage interest rates are at near historic lows.


The Fed’s announcement makes the rate in the United States the lowest in the Western World. Eventually, this will have an inflationary effect and rates will need to rise. Don’t look for this any time soon.

Fed Target Rate

Fed Target Rate


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No Evictions

The WSJ reported today that if you’re a tenant living in a house that’s mortgage is foreclosed upon, you might be able to stay. It’ll all depend on who ended up with the property. Beginning January 9, 2009 Fannie Mae will allow tenants to sign leases for foreclosed upon houses in which they live. While this is a good idea, it affects a small number of people nationwide, perhaps 4,000.

Other owners of foreclosed upon houses, such as publicly traded banks, may indeed vacate the premise to aide in selling it. Rising tides raise all ships, and an improved national economy should decrease the foreclosure rate, which is at record highs of some 1 in 20 mortgages. So, things will probably get worse before they get better.