When will the rates go down???

Wow - I think that they are all nothing but theories.  As I understand it we shouldn't expect rates to go down.  Rates have been kept down in part to allow 3rd world countries (i.e. China) to develop their markets.  Now that China has developed into a significant world player we can expect rates to stay the same or climb.

This is very simplistic but I don't expect a drop in rates.  We are still at risk of inflation and until that goes away we won't see a shift in rates.  Just MHO.

The feds manage our economy in one of two ways:

1.  Adjusting Interest Rates

2.  Adding Liquidity - as we saw done on Friday.

Adjusting rates gives has a time delay in terms of it's effects on the market while directly adding liquidity has an instant effect.  We are seeing that today as the stock and bond markets have stabalized, at least temporarily.

I don't think the seller's market is due back anytime soon

so long as there are foreclosures looming it is inevitable that the buyers will reign!

IMO, the market is going to pick up some during the end of the first quarter of 2008.  I think that we will see lenders replacing the products that they are running from now.  Also, FHA is said to be changing (for the better) their guidelines.  I think that FHA may be the new sub-prime. 

-thor

It appears that the Fed may be forced/decide to cut short term rates which will take ARM's down maybe enough to make them attractive enough again from a risk/reward perspective.  Since Fixed rates have basically be artificially low thanks to foreign appetite for our bonds if those same foreigners lose their appetite for our mortgage bonds with this fiasco then expect long term rates to go up.

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