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The Washington Post this morning published a breathless piece on the fact that the Obamas got a good deal on their home loan -- a 5.625% rate when the average rate was 5.93%. Needless to say, the wingnuts have worked themselves up into a froth over the information.

Let's just stand back and allow Nate Silver at FiveThirtyEight deliver the definitive smackdown:

So Obama's rate was 30 basis points better than the average. However, the amount of the loan and the nature of the property are not the only factors that determine a mortgage rate. Another major consideration is the creditworthiness of the borrower. According to current rate quotes from myFICO.com, a borrower with very good credit can expect a mortgage rate about 30 basis points better than someone with pretty good credit, and a borrower with excellent credit can expect about a 50 basis point discount.

Unless the Washington Post has access to Obama's FICO score -- and unless it has rented an apartment to him, it probably doesn't -- it is missing a pretty important piece of information on what Obama's mortgage rate ought to have been. What was Obama's FICO score? I don't know, but considering that...

* Obama had just gotten a $2.27 million book deal from Random House -- about $1 million more than the value of the mortgage.

* The Obamas each had exceptionally secure jobs that paid them a combined annual salary of about $500,000 per year.

* The Obamas had just sold their condo, on which they had realized a $137,500 profit.

* The Obamas were prominent public figures whose political futures depended in part on maintaining a reputation for responsibility and trustworthiness.

* The Obamas are known to be relatively thrifty and have no credit card debt but substantial savings.

...I would think that the Obamas were exceptionally creditworthy. So indeed, Obama received a "discount" -- the same discount that any borrower in his position would have received.

And, as Media Matters points out, "average" actually means something pertinent in this context (provided for the arithmetically challenged):

Indeed, the very concept of an "average" rate means that a substantial number of loans would have been at interest rates below the average level, as well as a substantial number above that level, and does not suggest that rates below average -- if in fact the Obamas received a below-average rate -- resulted from preferential treatment.

Originally posted to Daily Kos on Wed Jul 02, 2008 at 01:20 PM PDT.

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