Archive for the ‘Uncategorized’ Category

Down means down, but down means up; up means up, but up means down.

September 13, 2007

No, this is not the beginning of a Dr. Seuss book . . . and it’s not the beginning of a philosophical discussion about relativism and post-modernism — or any “ism” for that matter.  And (because there are already 490,000 google findings on the topic), it is not about whether or not the movie Gladiator correctly portrayed the emperor’s decision to show mercy or have a gladiator put to death.  Did up mean down? or down, up?  Or . . . you get the point. 


This post is about rates.  Specifically, the “rates” that have made the speculative news this week and will hit every news station in the country next week (and will inevitably make my telephone ring off the hook) — the Feds are LOWERING RATES (probably).  What does that really mean?

Well, most people (hence the phone calls) assume that the Feds control mortgage rates, and when they “lower rates” that this has an instant impact on mortgage rates.  This is not at all the case.  The rate controlled by the Federal Reserve is called the Federal Funding rate.  This rate is the benchmark rate that banks use to borrower money from each other in order to meet their mandated reserve requirements.  By lowering the Federal Funding rate, the Federal Reserve decreases the overall costs of doing business for the banks (the projection is that they will lower by 0.25% or 0.5% after next Tuesday’s meeting).  This savings is passed on to bank customers in the form of a reduction in prime rate (which follows the Federal Funding rate exactly); and a reduction in prime rate has a direct impact on credit card rates, car loans, second mortgage rates and home equity line of credit rates. 

Strange but true, mortgage rates often move in the OPPOSITE direction of the Fed’s move in rates.  For more details on why this happens, check out my previous post on the subject here.

So why all the up, down, look-all-around business?  Here is why . . .

If the Feds lower rates (the Federal funding rate), prime rate will go down, your credit card rates and your home equity line of credit rates will go down, but mortgage rates could go up.  The sentiment of the mortgage-backed securities market — and the future movement of mortgage rates — will be more concerned and focused on the statement and comments from the Federal Reserve (more so than their movement in rates). 

If you are still confused, send me an email, give me a call or post a question or comment on the blog and I’ll do my best to answer your questions.  I hope this post serves you well . . . my name is Mortgage Broker.


Jeffrey Pinkerton is a Mortgage Consultant and President of Hillside Lending, LLC and writer for “the Mortgage Blog.”  Hillside Lending seeks to provide mortgage brokerage services with the highest standards of service, care, honesty, integrity and value; concentrating on owner-occupied, residential financing.  For more information about available programs and interest rates, please visit  

The most important part of the loan process.

August 7, 2007

“the Mortgage Blog” enters in to the world of streaming video with a light-hearted commentary on the current state of the mortgage industry. 

 Anybody can take a mortgage loan  . . . but can you actually fund the mortgage loan??  That’s really the most important part you know.  Anybody can just take a loan application.

Looking for “the Mortgage Blog?”

September 7, 2006

To go “the Mortgage Blog” by Jeffrey Pinkerton, click here.