Why have mortgage rates varied so much recently?
Interest rates have been moving around quite a bit this last six to twelve months, and primarily that’s due to what we’re all hearing is the credit crunch. The credit crunch in a nutshell is the lack of banks willing to lend money to consumers. We’ve all heard about the Federal Reserve lowering interest rates, which would lead the average individual to believe interest rates would fall, but that hasn’t necessarily happened. I need to tell my customers quite often that the Federal Reserve only controls short-term interest rates, short-term Treasury rates, actually. They really do not control long-term Treasury rates, nor do they control mortgage rates. Long-term Treasury rates and mortgage rates are really concerned, are really controlled — basically, they move based on expectations, what people believe is going to happen in the future in terms of interest rates. With the price of gasoline going up, with the price of food going up, I think it’s quite obvious that we have run into a bout
