Many people equate this news as a prerequisite to relief for the housing/credit/sub-prime-crunch. In reality, the only mortgage loans directly effected by this cut are home Equity Lines of Credit since they are tied to PRIME, which is tied to the Fed Funds Rate.
Last week (or so) the jobs report came in below analysts expectations which does directly effect mortgage rates (for the better in this case). Click here for the other major mortgage rate adjusters.
My stock portfolio (and the general markets fragile emotional psyche) really appreciated the move Mr. Bernanke…hopefully Jim Cramer’s blood pressure has dropped a notch or three too…
As the title satirically points out, newspapers can make the genuinely uninformed, straight up ignorant.
Here’s a sample of comments or opinions i’ve heard from other people in the past few weeks:
- ‘The government dropped mortgage rates by half a percent’. One guy yelling to another as he reads from a newspaper…Also the inspiration for the title to this post.
- ‘Petraeus rhymes with betray us, ya know…I don’t trust him’ This must have originated from the New York Times advertisement that was taken out by MoveOn.org (at 36% of the normal advertising rate).
- ‘President Bush sucks, I can’t wait for him to get out of the White House, he will go down as one of the worst President’s in history’. I asked this person why he felt this way (my opinion of the President is irrelevant). He said ‘Because he’s stupid and screwed this country up’. I asked him to elaborate. ‘Well in the paper they said…’. Enough said.
- ‘The Housing Bubble has officially popped and it’s going to drag our entire economy into a recession.’ I was in downtown Charlotte North Carolina, the banking capital of the east, and two guys in suits were having this conversation over lunch which got more specifically grim as their prognosis went on. Once they left their table I noticed a copy of the New York Post on their table opened to an op-ed piece about the rapid depreciation of real estate. Maybe they forgot they were in Charlotte where population and appreciation are both still on a very healthy upward tick..?
- After telling a banker that ‘I worked in real estate and mortgage’, he professed to me that this is the worst time to buy real estate and that he is ’selling his real estate and buying stocks’ as he pointed to the financial section of the paper showing the Dow up 113 points. I simply asked him ‘So what you’re saying is buy high and sell low?’ He started no nod his head yes, then he thought…
The moral of the story is find the truth yourself, don’t let anyone else tell you what your truths are or should be.
