Banks Fail to Lower Mortgage Rates as Bernanke Cuts (Update1)
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bernanke, Mortgage Interest Rates March 27th, 2008March 27 (Bloomberg) — Marjorie Killian is eager to buy a home in San Diego and is pre-approved for a mortgage. She won’t make an offer on a property until she can get a fixed rate of 5.5 percent, she said.
Killian is just the kind of buyer that Federal Reserve Chairman Ben Bernanke needs to entice to revive the U.S. housing market and halt its drag on the economy. Lenders aren’t helping the central bank even after they’ve been given seven interest rate cuts and a new program designed to jumpstart borrowing.
The difference between the 10-year government bond yield and the average U.S. fixed mortgage rate was 2.7 percentage points last month, the widest spread since 1986, data compiled by Bloomberg show. Banks are defying Bernanke and hoarding cash after writing down the value of more than $200 billion of mortgage-related securities since July. The banking industry’s earnings fell to a 16-year low of $5.8 billion in the fourth quarter of 2007, ending six years of record profits, according to the Federal Deposit Insurance Corp. in Washington.
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Tags: bernanke, Mortgage Interest Rates
