Rich Toscano, talking about mortgage rates, gives us this little bit of chart fun:

If you take a look, you will notice that the 30 year fixed and 1 year ARM rates change very little relative to the Federal Funds rate as charged set by the Federal Reserve.

It comes down to the fact that the lenders are interested in how interest rates effect them, and even if the rates are low today, they may be higher tomorrow.

If interest rates are 9%, and you have a 30 year fixed mortgage at 6%, you will not be a happy camper.

Thus, you don’t cut all that much when the Fed sets rates really low, because you have to look forward many years.

The 1 year ARM is a bit more amenable to the interest rate cuts, but only a little, since they typically have a limit to how much the rates will go up over time, and you can end up behind the same 8-ball.

This is why the drastic rates cuts instituted by Bernanke aren’t working. People do not believe this to be a long term sustainable solution, so they are not willing to issue cheaper loans.

Hence the term pushing on a string.