Volatility in the Bond market affected Santa Barbara home loan rates violently but fixed home mortgage rates were better by around .25 percentage points ending the week.

With unprecedented weekend work, the Fed, this past Sunday evening, released news that the they not only decided to move to a decreased Discount Rate by .25%, 2 days ahead of  normal, but they also had helped assist the rescue of investment house Bear Stearns. The 80+ year old firm had its stock bought out by JPM Chase for $2 per share, $236 Million, a bargain basement special. Bear Stearns traded at almost $90 at the close of February, with a 52-week high almost at $160. Bear Stearns was the single largest buyer of sub-prime home mortgages, with huge eagerness for this kind of paper and they purchased sub-prime transactions averously, a strategy that certainly now looks ill advised, but now overblown. .

Adding to this crazy volatility was enormous news for Tuesday, starting with earnings and stance from two other major financial companies, Lehman Brothers along with Goldman Sachs, who reported more affirming results than had been predicted. Especially following the news of the Bear Stearns circumstances, this was highly greeted news to an edgy Stock market. New construction numbers reported varied, along with a better than expected take on wholesale inflation per the Producer Price Index. Then the Fed acted, and released their bureaucratic decision to cut Fed Fund Rates by ¾ of a %. Many people anticipated deeper cuts, but they likely kept the cut to only ¾ of a %. because of continued worries of inflation.

Then, for Wednesday, the investment house of Morgan Stanley came out with a positive earnings report, which was also seen as excellent news for the Stock market, but caused money to exit Bonds. Then of course came big news from the Office of Federal Housing Enterprise Oversight (OFHEO), announcing that they lifted particular capital restrictions that were put in place for Fannie Mae and Freddie Mac. Permitting these firms to pump $200 Billion into loan markets through the purchase of Mortgage Bonds. The probablity of increasing demand was very positive news for the Bond market and Santa Barbara home mortgage rates reflected that, which immediately lowered on the news.

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