There was a time when a 5.375%, 30-year, fixed-rate mortgage seemed outrageously low. Then it was 4.25%. Now it is 3.5%. Lesson number one: just because Fed Funds is at zero it doesn't mean rates can't fall further. In its FOMC statements the Fed has consistently stated that they will not raise the Fed Funds rate until late 2014 at the earliest.

Lesson number two: the folks at the Fed are a lot smarter than I am. Maybe 3.5%, fixed-rate mortgages aren't so bad. Be very, very good at asset-liability management and become very, very efficient in your operations. Because the Fed is smarter than I am and a 3.5% fixed mortgage may look really good for a long time into the future.

Evan Clark, President/CEO
Department of Commerce FCU
Washington, DC

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