{"id":195542,"date":"2008-07-01T21:33:00","date_gmt":"2008-07-02T02:33:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2008\/07\/01\/what-i-mean-by-pushing-on-a-string\/"},"modified":"2008-07-01T21:33:00","modified_gmt":"2008-07-02T02:33:00","slug":"what-i-mean-by-pushing-on-a-string","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2008\/07\/01\/what-i-mean-by-pushing-on-a-string\/","title":{"rendered":"What I Mean by &#8220;Pushing on a String&#8221;"},"content":{"rendered":"<p><a href=\"http:\/\/img106.imageshack.us\/img106\/3377\/jul08ratesrv7.jpg\"><img decoding=\"async\" style=\"margin: 0pt 10px 10px 0pt; float: left; cursor: pointer;\" src=\"http:\/\/img106.imageshack.us\/img106\/3377\/jul08ratesrv7.jpg\" alt=\"\" border=\"0\" \/><\/a><br \/>Rich Toscano, talking about mortgage rates, <a href=\"http:\/\/www.voiceofsandiego.org\/articles\/2008\/07\/01\/toscano\/798mortgagerates070108.txt\">gives us this little bit of chart fun<\/a>:<\/p>\n<p>If you take a look, you will notice that the 30 year fixed and 1 year ARM rates change very little relative to the Federal Funds rate as charged set by the Federal Reserve.<\/p>\n<p>It comes down to the fact that the lenders are interested in how interest rates effect <span style=\"font-weight: bold;\">them<\/span>, and even if the rates are low today, they may be higher tomorrow.<\/p>\n<p>If interest rates are 9%, and you have a 30 year fixed mortgage at 6%, you will not be a happy camper.<\/p>\n<p>Thus, you don&#8217;t cut all that much when the Fed sets rates <span style=\"font-weight: bold;\">really low<\/span>, because you have to look forward many years.<\/p>\n<p>The 1 year ARM is a bit more amenable to the interest rate cuts, but only a little, since they typically have a limit to how much the rates will go up over time, and you can end up behind the same 8-ball.<\/p>\n<p>This is why the drastic rates cuts instituted by Bernanke aren&#8217;t working.  People do not believe this to be a long term sustainable solution, so they are not willing to issue cheaper loans.<\/p>\n<p>Hence the term pushing on a string.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Rich Toscano, talking about mortgage rates, gives us this little bit of chart fun: If you take a look, you will notice that the 30 year fixed and 1 year ARM rates change very little relative to the Federal Funds rate as charged set by the Federal Reserve. It comes down to the fact that &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1004,1088,985],"tags":[],"class_list":["post-195542","post","type-post","status-publish","format-standard","hentry","category-finance","category-real-estate","category-regulation"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/195542"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=195542"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/195542\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=195542"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=195542"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=195542"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}