Big news yesterday in the world of Big (Jumbo) Loans, and big rate hikes, that fortunately appear to be stabalizing. Talk about creating panic. If you have the time, scan the links, then make sure to read “Some Reactions as well. Thanks to DL for sending the link and this quote below:

The Fed leaving rates unchanged is good. A cut would signal panic as in ‘it’s worse than you think.’ Leaving rates unchanged is to help the continuing repricing of risk. Greenspan cut rates too low in what they call the ‘Greenspan Put’ when he pushed rates close to 1%. It resulted in excess liquidity and we have all lived through five years of real estate appreciation in San Francisco that was one of the results. The situation right now, particularly with Jumbo loans, is the market jumping around to reprice risk. Will it overshoot? Probably and hopefully today’s Fed action will help calm it down. Word from your colleagues and mortgage brokers will tell the tale over the next weeks.

Money Quote:

… “The judgment here is that the FOMC got it right when it came to addressing current credit market conditions. We are seeing a much overdue, albeit painful, repricing of risk, and just as the pendulum had swung way too far in the ‘easy’ direction in recent years, in terms of credit availability, it will surely swing too far in the ‘tight’ correction as the markets learn to reprice risk.” –Richard F. Moody, Mission Residential

–Big-ticket mortgage rates rise: The cost of financing an expensive home purchase is jumping, making high-end buyers the latest victims of the mortgage meltdown [CNN Money.com]

–Mortgage Fears Drive Up Rates On Jumbo Loans [The Wall Street Journal]

–Rates Steady, Statement Soothes: The Fed holds a key short-term rate at 5.25 percent and Ben Bernanke & Co. calm market’s fears about a credit crunch and inflation. [CNN Money.com]

–Some Reactions [The Wall Street Journal]