Mortgage Rates in 2008

The Federal Reserve cut the fed funds rate eight times — from 4.25% at the start of 2008 to 0.25% after the Lehman Brothers collapse in September. The Fed launched its first quantitative easing (QE1) program, purchasing $1.25 trillion in mortgage-backed securities.

CPI reached 3.8% early in the year as oil hit $147/barrel, then collapsed to near-zero by December as the financial crisis triggered asset deflation. The year saw the most volatile inflation readings since the 1970s.

Housing prices fell 20%+ nationally — the worst decline since the Great Depression. Foreclosures reached record levels. Subprime lending collapsed, taking Bear Stearns and Lehman with it. Mortgage rates were paradoxically volatile — rising in Q3 amid credit panic, then falling sharply after QE1.