most people think that a fed funds rate has a direct relationship to mortgage rates. A 25 or 50 point bp drop in the fed funds rate may actually have no effect on long term mortgage rates
Greenspan said as much today (see CNBC interview), also I think your comment can be extended somewhat to the short-term rates (for mortgages) since many link to LIBOR.
What effect will the BofE bailout have on LIBOR…?
IMVHO (and a touch of insider info), I think the global finance markets have much less control than they’d thought when things were humming along swimmingly, and that they are just now seeing how little control they have over the big picture.
