Fed Watch: Missing The Mark

Today's MBA report shows even more reduction in home loan demand, coming on the heels of yesterday's Commerce report saying that new home construction is on the rise.

Now, if this isn't a textbook example of a glut situation, what is, really? Too much supply, too little demand. In the MBA's mind, the chief culprit is the continuing rise in interest rates, and already there is a ton of handwringing about there will be more from the Fed. Money quote:

"You've seen the Fed do it over and over again. They raise rates a bit too much, then adjust later," Chan said, noting that the full effect of rate hikes aren't felt throughout the economy for many months after the fact.

Indeed. Just as the full effect of cutting rates so sharply in 2001 didn't really come to pass until beginning last year. What goes around...

Posted at June 21, 2006 02:58 PM

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Today's MBA report shows even more reduction in home loan demand, coming on the heels of yesterday's Commerce report saying that new home construction is on the rise. Now, if this isn't a textbook example of a glut situation, what is, really? Too much supply, too little demand. In the MBA's mind, the chief culprit is the continuing rise in interest rates, and already there is a ton of handwringing about there will be more from the Fed. Money quote: "You've seen the Fed do it over and over again. They raise rates a bit too much, then adjust later," Chan said, noting that the full effect of rate hikes aren't felt throughout the economy for many months after the fact. Indeed. Just as the full effect of cutting rates so sharply in 2001 didn't really come to pass until beginning last year. What goes around...