Thursday, January 10, 2008

Interest Rates


3 Month LIBOR
3 Month CMT
Federal Funds
The LIBOR Index, which is the index that controls the adjustment of most all adjustable rate mortgages and thusly a direct contributer to the rampant foreclosure problem, is depicted here.

Note the correlation to the Fed Funds Rate.

Did our own Central bank knowingly sabotage our raging housing market. 17 consecutive rate hikes in a massive debt boom what would you expect to happen. The escalation of the LIBOR Index which now is forcing very high adjustments to teaser rates on adjustable rate mortgages did not happen by itself. Now the FED is here to save the day with rate cuts if the market needs it. What!?! Does anyone want to ask them why they cranked it up in the first place and are now trying to play hero to a problem it appears they were in direct control of creating? Your thoughts....
Posted by at
Labels: , ,

1 comment:

  1. Alan BarkerJanuary 14, 2008 at 10:50 PM

    The feds error wasn't in raising the interest rate this time, it was letting it get so low in '04. Interest rates got so low, and loans were so easy to get housing was artificially inflated.

    Then, when rates began to get almost back to a normal level, it created a crisis. Americans were too used to the cheap money that reality was to hard to deal with.

    Fortunately in American Fork we didn't have the huge appreciation during the boom.

    ReplyDelete

Subscribe to: Post Comments (Atom)