Mortgage rates are moving even lower with the average 30 year now at 4.2%.  I would expect rates to fall even further, perhaps piercing 4% on the prospect of quantitative easing (QE) by the Federal Reserve in November. 

What is not clear, however, is whether banks will really want to refinance loans at rates that begin to approach and threaten net interest margins historically in the 3-4% range.  Already their cost of funds on your deposits are approaching or are at zero, meaning that any lending rates below 3-4% start to pressure their historical net interest profit margins.  

The Fed’s efforts at this point may be tantamount to pushing on a string which give everyone one more reason to bash the banking industry.  

Speaking of which, check out this great letter!


An 86-year Old Lady’s Letter to the Bank

Shown below, is an actual letter that was sent to a bank by an 86 year
old woman.

The bank manager thought it amusing enough to have it published in the
New York Times.


Dear Sir:

I am writing to thank you for bouncing my check with which I
endeavored to pay my plumber last month.

By my calculations, three nanoseconds must have elapsed between
his presenting the check and the arrival in my account of the funds
needed to honor it…

I refer, of course, to the automatic monthly deposit of my entire
pension, an arrangement which, I admit, has been in place for only
eight years.

You are to be commended for seizing that brief window of opportunity,
and also for debiting my account $30 by way of penalty for the
inconvenience caused to your bank.

My thankfulness springs from the manner in which this incident has
caused me to rethink my errant financial ways.

I noticed that whereas I personally answer your telephone calls
and letters, — when I try to contact you, I am confronted by the
impersonal, overcharging, pre-recorded, faceless entity which your bank
has become.

From now on, I, like you, choose only to deal with a
flesh-and-blood person.

My mortgage and loan repayments will therefore, hereafter, no longer
be automatic, but will arrive at your bank, by check, addressed
personally and confidentially to an employee at your bank whom you must

Be aware that it is an OFFENSE under the Postal Act for any other
person to open such an envelope.

Please find attached an Application Contact which I require your
chosen employee to complete.

I am sorry it runs to eight pages, but in order that I know as much
about him or her as your bank knows about me, there is no alternative.

Please note that all copies of his or her medical history must
be countersigned by a Notary Public, and the mandatory details of
his/her financial situation (income, debts, assets and liabilities)
must be accompanied by documented proof.

In due course, at MY convenience, I will issue your employee with a
PIN number which he/she must quote in dealings with me.

I regret that it cannot be shorter than 28 digits but, again, I
have modeled it on the number of button presses required of me to
access my account balance on your phone bank service.

As they say, imitation is the sincerest form of flattery.

Let me level the playing field even further.

When you call me, press buttons as follows:


#1. To make an appointment to see me.

#2. To query a missing payment.

#3. To transfer the call to my living room in case I am there.

#4. To transfer the call to my bedroom in case I am sleeping.

#5. To transfer the call to my toilet in case I am attending to nature.

#6. To transfer the call to my mobile phone if I am not at home.

#7. To leave a message on my computer, a password to access my
computer is required. – A password will be communicated to that
Authorized Contact mentioned earlier.

#8. To return to the main menu and to listen to options 1 through 7.

#9. To make a general complaint or inquiry. – The contact will then be
put on hold, pending the attention of my automated answering service.

#10. This is a second reminder to press* for English. – While this
may, on occasion, involve a lengthy wait, uplifting music will play for
the duration of the call.

Regrettably, but again following your example, I must also levy
an establishment fee to cover the setting up of this new arrangement.

May I wish you a happy, if ever so slightly less prosperous New Year?

Your Humble Client

And remember: Don’t make old People mad. We don’t like being old in
the first place, so it doesn’t take much to piss us off.