Good morning! With the recent volatility in mortgage rates, it leads one to wonder which way-up or down? Lately, rates have been climbing although they almost always do during the summer. Lately, the predictions have been for rates to either decrease slightly (currently they're at 6.25% on a 30 year fixed O.A.C.) or stay the same. I concur.
It appears the Federal Reserve will leave short-term borrowing rates alone. There was a lot of speculation that rates might increase but it appears the greater concern is inflation at this point. I would bet the Fed. will leave rates alone for most of the balance of this year. Again, short-term rates have nothing to do with mortgage rates; it's just that what the Fed. does or doesn't do affects the stock market and this is a broad indicator of the direction of our economy in the future.
Us mortgage folk always wish for a market downturn as it means people are putting their money into safer havens such as bonds. As the bond market goes, so go mortgage rates. I think the mood swings will continue for the balance of this year and possibly into 2009. There still is plenty of shakeout in the real estate busines that needs to be done. Plus, I was reading this morning that experts are predicting that writedowns from mortgage losses may be 50% greater than originally predicted. Initially, the prognosticators thought there would be close to $900 billion in writedowns. Now they're saying the figure may be closer to $1.3 trillion. Expect a continued consolidation of financial institutions and for credit to remain tight.
I'm curious as to your thoughts. In the mean time, keep plugging. These are interesting and trying times but the professionals among us will emerge at the other end and be prepared for the next wave. Have a great day!
Paul
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