Looks like the T-bill held along with the rates today despite the 400 point drop. I just think they are going to hold the spread for now.

In other news, Fannie Mae now has 180 days to get the stock above $1 or it will be booted from the NSDAQ and NYSE. This will be interesting.

Lucas,

Good question......maybe never. They're usually a function of th Tbill rates and while I don't follow those rates, I would guess T-bill rates are going up to attract foreign investment to US backed notes.

You can probably see more relationship from the graphs at:

http://library.hsh.com/?row_id=90

There is no telling what the rates will do. If the loan officers actually knew the interest rate was going to go down they could make a fortune on futures and bonds. Not to mention picking the lotto.

I have a hard time seeing the rational behind lowering the interest rates, when no one wants to buy US Paper. Why would an investor drop their money into US mortgages (read: bonds) when they are failing and the return is lousy? IMHO the Fed is going to have to raise the rate to get China, Japan, UK, etc. to want to invest in our paper.

Lowering the rate is not the problem although it might help clear out some old inventory. Even if the rate were 3% people still have to qualify for the loan and there is the rub. Credit requirements are more stringent, more down payment required, no down payment assistance programs, no 100% loans even for people with substantial incomes, etc. January 1, 2009 the down payment requirement for FHA with go from 3% to 3.5%. Not a major change, but when you combine the little changes the market really starts to constrict.

I think FHA/VA will be the way to go in the near future. I really don't see how rates will go down that low, but you never know.

Lower prices will stimulate the real estate market more than reduced interest rates on mortgages. Wait another year, save another 20% on the price and get a lower interest rate too. Good Luck