Mortgage Lender Stocks Soar on Ben Bernanke's Comments
Shares of mortgage lenders soared Friday after Federal Reserve Chairman Ben Bernanke signaled his willingness to slash interest rates again to prop up wobbly financial markets.
Bernanke, in a speech late Thursday, said the Fed will be "exceptionally alert and flexible" to find posThis echoes comments from other central bank officers in the past few days suggesting a cut in interest rates next month.
The Federal Reserve's task is to balance growth against inflation by setting an interest rate target that ensures the economy grows neither too quickly nor too sluggishly.
The Fed cut its target rate in September to 4.75 percent from 5.25 percent, and cut the rate further at the end of October to 4.5 percent. Paul J. Nolte, director of investments at Hinsdale Associates, said based on the rally in stocks this week people appear to expect the Fed will cut rates again.
Lower interest rates make it cheaper for mortgage lenders to raise cash and more enticing for people to buy homes. Presumably, they may also lure buyers back into the market for risky mortgage debt, although Nolte said he does not think interest rates will necessarily accomplish this.sible remedies for the housing slump and decaying mortgage credit quality.
Bernanke, in a speech late Thursday, said the Fed will be "exceptionally alert and flexible" to find posThis echoes comments from other central bank officers in the past few days suggesting a cut in interest rates next month.
The Federal Reserve's task is to balance growth against inflation by setting an interest rate target that ensures the economy grows neither too quickly nor too sluggishly.
The Fed cut its target rate in September to 4.75 percent from 5.25 percent, and cut the rate further at the end of October to 4.5 percent. Paul J. Nolte, director of investments at Hinsdale Associates, said based on the rally in stocks this week people appear to expect the Fed will cut rates again.
Lower interest rates make it cheaper for mortgage lenders to raise cash and more enticing for people to buy homes. Presumably, they may also lure buyers back into the market for risky mortgage debt, although Nolte said he does not think interest rates will necessarily accomplish this.sible remedies for the housing slump and decaying mortgage credit quality.
posted by Stock Administrator @ 1:31 PM
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