Fed Up, Rates Down

Yes, the media does report fake things

I’ve been around the mortgage world since the 80s. Very early in my career I learned one thing. When the Fed says they are going up, mortgage interest rates come down. Sell on the news. That’s what they call it on Wall Street.

But the mainstream media keeps reporting the same old same old every time they report that the Fed did or will raise rates, they then follow it up with a line about how this will increase the cost of interest for personal, car loans and mortgages.

This copy was probably written in 1964 when the bank was the only place to get a mortgage. Now, we have private lenders, mortgage backed securities, etc, etc. Time for NBC, CBS, ABC, CNN, etc. update your info!

Mortgage rates are not set by the Fed. They are set by markets that are just like the stock market. Prices change all the time. Swings in those changes makes rates go up or down. And that’s where sell on the news comes in. Most economists predicted what they would do and institutions and private traders already placed their bet.

See this chart. This will show a history (Thanks to Matthew Graham)

The market already knew that. The mortgage market then looks at factors each day after that, not the fact that the Fed might raise. Never are the rates much higher than the Fed expectation this year. (If I can find an older chart, I will update).

Also, the Fed does not give money to banks to lend for 30 years and not only banks can get you a mortgage.

Bottom line, please ask the media to stop saying rates go up when the Fed raises them!!!