Good Afternoon,

As the year comes to a close, its encouraging looking ahead to a new year filled with unlimited opportunities and prosperity! Okay, maybe I'm just a LITTLE optimistic, but in this business optimism is what keeps us from diving out the window.

As the numbers continue to pour in from the year's end and projections made for the next, it looks like it will continue to be a rough ride. With increasing foreclosures in Connecticut and tighten loan guidelines nationwide, we will continue to feel the crunch well into 2008. As the market twists and turns, make sure you have a mortgage provider that can adjust to the times. At Horizon Home Mortgage, we have invested in the technology and resources to build your business as well as ours. Give us the chance to put our words to the test.

Conforming rates for 100% Financing and the lower LTV's increased by 0.125% from last week. Sub-prime rates vary on a case by case basis so please call for pricing. Don't forget to register for the up coming seminar "The Future of Real Estate" for an even more in-depth view of the real estate market. Have a great weekend and a Happy New Year!!!

The Connecticut Economic Outlook: Foreclosures, Subprime Crisis Will Distress State Economy

By Peter E. Gunther, Connecticut Center of Economic Analysis, 12/24/07

The Congressional Joint Economic Committee (JEC) analysis on the subprime crisis anticipates that Connecticut will suffer foreclosures inflicting losses of $1.4 billion, $876 million directly, and another $531 million through declining prices of properties in neighborhoods where foreclosures occur. With falling property values, local property tax revenues will suffer a loss of $19 million. The JEC expects the tri-state area to bear 16.6 percent of the $103 billion cost of the mortgage crisis.

Given JEC expectations, it will take much of the next nine quarters for the subprime mortgage debacle and associated housing surpluses to work their way through the economy.

Foreclosure Adjustment

Residential construction permits for Connecticut and New York (Table 1) suggest that by the end of 2007, contractors will have adjusted to expectations concerning foreclosures. And there are suggestions that the population is beginning to relocate in order to minimize transportation costs.

Residential construction seems to be adjusting rapidly to the new environment. Expectations for permits of the next nine quarters are down, compared with the previous nine quarters before the slide began, by nearly 13,500, just short of the 14,047 subprime foreclosures the JEC expects over the next nine quarters.

The shift in Connecticut and especially New York to an increasing share of units in urban areas suggests that people may be reducing transportation costs by moving closer to work or mass transit.

Permit values reveal the direction of future construction activity. Table 2 presents the percentage changes in the value of private residential construction permits, paralleling much of what Table 1 covered.

Two points are clear at a glance: declines in aggregate value of all units and single family homes are considerably smaller than for numbers of units, and the value of permits for structures with five or more units is positive in Connecticut. As it is aggregate value, not units, that drives activity, construction should not differ as much as mere permit data suggests.

How Will Connecticut Fare?

Connecticut's seasonally adjusted unit housing permits have already made most of the needed adjustments. The outlook anticipates they will decline gently from 1,911 in the next quarter to 1,891 in the fourth quarter of 2009.

Despite the ubiquity of subprime impacts, Connecticut enjoyed sustained growth in the most recent two quarters of 3.8 percent and 3.9 percent in its real GDP at annual rates. This outlook anticipates slowing growth of 2 percent for 2008 and 1.8 percent for 2009.

Consistent with the devalued dollar affording wider opportunities for American exports, in Connecticut, manufacturing earnings in 2007-Q3 outperformed expectations by $7.13 a week. Nevertheless, manufacturing earnings will continue to be under pressure from competing imported goods and services. The rising cost of important inputs will also pressure earnings, such as energy, potentially leading to annual declines by less than half a percent.

The above factors should support modest growth for Connecticut GDP and seasonally adjusted employment of 2 percent in 2007 and 1.8 percent in 2009. Chart 1 presents Connecticut quarterly GDP.

Employment is expected to grow modestly, with .75 percent in 2008 and an almost vanishingly small growth of .18 percent in early 2009. However, the state is expected to suffer an employment decline going into the fourth quarter of 2009. Chart 2 shows the levels anticipated for employment. If real growth holds up better than now anticipated, employment growth could continue through 2009.

Sector Analysis

With three quarters of data in preliminary form, the GDP growth for 2007 in the finance insurance and real estate industry to be 3.8 percent. With ongoing pressures from credit markets, the rate of growth will decline from 3.0 percent to 1.9 percent annually going out to 2009.

With dollar depreciation, manufacturing is likely to continue to do well, with expected growth of 3.9 percent and 3.0 percent in 2008 and 2009.

*FLEX 100 PROGRAM

** Loan contains 3 yr pre-payment penalty

All Rates assume financing for a single family/condo,

primary residence, full documentation, 30 yr fixed. For other property,

occupancy, documentation and loan types, please call for pricing.

Rates subject to change

****COMMUNITY LENDING SPECIAL ****

6.875%  - 100% Financing, single family/condo, primary residence

w/ 600+ credit score. Rate is for approval thru community lending program.

Applicant income cannot exceed $80,200 for Hartford County or property

must be located in low-to-moderate income census tract.

Rates subject to change 

6.00%  - 97% Financing, single family/condo, primary residence

Rates subject to change

Do not hesitate to call regarding any scenarios or questions. We're always here to help!