Weekly Market Update

Week of Monday, May 12th

Present Market Conditions
The entire economy, including buyers, is in a wait and watch stance to survey the effects of the latest FED rate cut. "Despite a weak housing market, mortgage rates remained almost unchanged this week based on better-than-expected economic data releases that indicated the economy still has some staying power," said Frank Nothaft, Freddie Mac vice president and chief economist. Fannie Mae announced that it will buy the new Jumbo Conforming mortgages for the same prices as those below the old conforming loan limit, which should make some larger mortgages more affordable.

Expectations
Housing inventories are expected to drop to 400,000 (seven-month supply) by the end of '08 and to a five month supply sometime in '09. A five-month supply has historically signaled tightness in the housing market and normally results in a decline in rates. Expected to pass the Senate and be signed by the President, a $300 billion FHA housing loan guarantee program will assist troubled borrowers in refinancing into a mortgage with more affordable terms, resulting in a reduction in the number of foreclosures.

Guidance
Prolonged low interest rates and greater affordability (lowering home prices) will attract buyers into play; indeed it is a good time to buy. Now is the time to contact your mortgage professional so they can structure a mortgage solution to meet your financial goals.