12/10   How come mortgage interest rates didn't drop sharply during the past
        month given that the 0.5% Fed intereste rate drop on 11/6 was a
        surprise one rather than an anticipated one?
        \_ Long-term (expected) budget deficits keep bond prices low.
           Interest rates move in the opposite direction of bond prices.
           \_ to add to this, mortgage rates do indeed follow the yield on
              the 30 year treasury.  Like the stock market, expectation
              moves the rate rather than the actual news.  That's why you
              see the market go up in anticipation of a news and actually
              drop after the news is confirmed.  Mortage rates are the same
              deal.  The threat of Iraq and imminent war will drive the
              mortgage rate down.  When when the bombs actually start
              dropping and we're kicking ass, you'll see it come back up
              again.
              \_ 5.825%/15 year baby!  Love this economy!
                 \_ I just refi'ed last week and got 5.375%/15 conforming.
                    \_ Let the mortgage dick waving commence!
        \_ It's not worth it for the companies to drop their rates. They've
           got enough business via refi's and new home buyers, dropping their
           rate overloads their business for low profit.
        \_ Home mortgages have to compete for cash, just like everything
           else. The other big competitor for the low-risk, long-term
           yield is 30 treasury bonds, so mortgages can't move too far
           from them. But there are other bonds, like AAA rated corporates,
           that are similar. So just the fact that the Fed is lending money
           at a lower rate to banks, doesn't neccessarily lower rates to
           to the consumer. Above posters said this, but in a less clear
           fashion, imo.
           \_ So, since the Fed lowering the rate doesn't mean consumer can get
              lower rates, how is the Fed lowering the rate going to stimulate
              the economy?  It still costs investors the same to borrow money
              to invest, so they won't be any more willing than before to
              invest and create jobs.
              \_ same way as tax cuts for the rich: trickle down economics!
                 \_ I knew we were getting trickled on!