Two Questions for NAR's Lawrence Yun

December 11, 2001
What lower rates mean for you

"A cut...won't affect the 30-year fixed mortgage rate at all," said Lawrence Yun, a senior economist at the National Association of Realtors. "According to Freddie Mac, the 30-year fixed rate was 6.8 percent last week, and we think it'll stay about the same. But another interest rate cut could mean a slight drop in the short-term one-year adjustable rate mortgage (ARM)."

Let's say, for the sake of argument, that the Fed spends the next 6 years jerking rates around in the name of financial stability. There's a completely unexpected housing bust that nobody could see coming. The Fed spends a year brutally hacking at those high rates with an axe, Lizzy Borden style. And then finally, the Fed sits on those new rates, stuck to the floor, like a grizzly bear desperately trying to protect her cubs. Would that affect the 30-year mortgage rate much?

I only ask because I'm trying to figure out how the mortgage rate got down to 3.63% this week.

My next question is easier.

When the economy does eventually slow down again, if it hasn't already, where can I score some more mortgage rate heroin? I have grave doubts about my dealer's ability to easily meet demand next time, lol. Sigh.

Bad Mark. Bad! Bad! ;)