First Liberty Financial: Lessons not learned

First Liberty Financial is running ads on television that take the form of fake news briefs. The top story? According to the ad, the federal government has pushed down interest rates on home loans insured by the Federal Housing Administration to all-time lows. This is untrue in both fact and concept. The federal government does not directly control long-term interest rates like those on home loans. The Federal Reserve controls short-term rates, and the Congress controls spending and debt levels; both may affect long-term interest rates, but so can a million other factors. But regardless of what you think about why long-term interest rates move up and down, one thing is true: today, interest rates on home loans are not at their all-time lows. As this graph shows, rates for 30-year mortgages are about half a point above their recent lows. It's a shame, but the cheap mortgage industry seems just as deceptive as ever.

By the way, the Federal Housing Administration, a New Deal program in operation since 1934, only insures about 5 million mortgages in the United States. Though it does set limits on the size of the loans it will insure and the ability of the borrower to pay, it does not set any limits on interest rates.