Twice as much ain’t twice as good.

Last Wednesday’s announcement from the Feds — that they would add an additional $750 billion dollars to the already allotted $500 billion dollars to continue to purchase mortgage backed securities through the end of the year — was big, big news.  Their original $500 billion pledged was scheduled to be completely paid out by July; but, last week’s news now pushes the time-line out until December 2009.

But will the $750 billion actually push mortgage rates lower?  Will more than twice as much money make mortgage rates dip twice as low??? 


Although I am certain it was not intended for this illustration, I agree with John Mayer, “twice as much ain’t twice as good.”

The media loves extreme news.  They will take extremely good news stories, although I think they prefer extremely bad news (more of an eye-catcher).  One story that recently ran on money dot com was talking about how in this current market a homeowner needs to have 20% equity in his or her home in order to refinance their mortgage.  When I emailed the editorial staff to let them know that this information was absolutely incorrect — that people can refinance their homes with very little equity in their homes (FHA streamline refinance) or even 5% equity in their homes for a conventional mortgage — the response was basically — yes, we saw that and made a choice to leave that information out because it “made an already complex story even more complex to understand.”

Hmmm . . . I think things are harder to understand when you don’t tell the whole story (just my opinion).

So, while the media began to buzz last week about the possibility of mortgage rates in the 4.0% range (a friend even stopped me in the grocery store and said he heard 3.875% from the radio consumer guru who certainly has enough money to not need a mortgage), most mortgage experts are taking a slightly different position.

Twice as much money in to the mortgage backed securities market may just mean that the current historically low mortgage rates will last twice as long.  Even if the technical signs point to lower mortgage rates, because of staffing issues and the fear of early pre-payment, there is not much evidence that lenders will be willing to pass on savings to homeowner’s and push mortgage rates much lower than where they have recently been . . . but, hey, I’m not the one with the $1.3 trillion dollars to play with in the market.


Jeffrey Pinkerton is a Mortgage Consultant and President of Hillside Lending, LLC and writer for “the Mortgage Blog.”  Hillside Lending seeks to provide mortgage brokerage services with the highest standards of service, care, honesty, integrity and value; concentrating on owner-occupied, residential financing.  For more information about available programs and interest rates, please visit


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