Federal Funds Rate and 30 Year Mortgages

[Limeade]

I know I know, the FFR affects short term loans like credit and car loans. But as I understand it mortgage rates mainly move in relation to inflation and the economy as a whole. Now heres my question, if the federal funds rate has such a big impact on the economy and the thwarting of inflation and economic growth, then doesn't the FFR INDIRECTLY affecte the average mortgage rate since it affects the factors that go on to move the mortgage rates?

Sorry this has been bothering me.

[abanh]

Not really, mortgage rates are affected by yields on 10 year treasury notes.

[Limeade]

Yeah I know, but when the Fed lowers the FFR, the stock market usually picks up. When the stock market starts picking up people usually start to take their money out of bonds and put it into stocks. When there's an influx of stock market money, there's a vacume left in bond sales. When the sale of bonds decreases the Coupon rate increases leaving the lender of the bond funds responsible for recouping the increased coupon amount which should be reflected in the long term mortgages it loans out.

[abanh]

Yeah I know, but when the Fed lowers the FFR, the stock market usually picks up. When the stock market starts picking up people usually start to take their money out of bonds and put it into stocks. When there's an influx of stock market money, there's a vacume left in bond sales. When the sale of bonds decreases the Coupon rate increases leaving the lender of the bond funds responsible for recouping the increased coupon amount which should be reflected in the long term mortgages it loans out.

That's true; in FFR affects everything in the economy in the big picture. I just said no because people think because the Fed lowered rates to 3.5% that I can give them a 30 year fixed mortgage rate at 3.5%:thumb:

[Limeade]

That's true; in FFR affects everything in the economy in the big picture. I just said no because people think because the Fed lowered rates to 3.5% that I can give them a 30 year fixed mortgage rate at 3.5%:thumb:

Thanks, I thought I was crazy, I had a debate with a loan officer like this

Him: The FFR does not effect longterm mortage rates
Me: Yes it does to some degree
Him: No it doesn't
Me: I assure you it does
Him: I ASSURE YOU IT DOES NOT
Me: You're looking at the small picture, look at the big one, but hey screw it I'm just wrapping up a degree in finance what do I know...
Him::weirdo:

So yeah I thought I was going crazy.

[DC]

Thanks, I thought I was crazy, I had a debate with a loan officer like this

Him: The FFR does not effect longterm mortage rates
Me: Yes it does to some degree
Him: No it doesn't
Me: I assure you it does
Him: I ASSURE YOU IT DOES NOT
Me: You're looking at the small picture, look at the big one, but hey screw it I'm just wrapping up a degree in finance what do I know...
Him::weirdo:

So yeah I thought I was going crazy.

lol