What Are Interest Rates Going To Do? 12/04/06

How often do we hear that question? "What Do You Think Interest Rates Are Going To Do?"
Here is a customer focused report for Mortgage Market Direction.

Week of: Monday, December 04, 2006

Present Market Conditions
Recent economic data reflect a cooling U.S. economy. The weakening data could soon force the Federal Reserve to change its tune and acknowledge that an economic slump is as big a risk as a sustained breakout in inflation, increasing the chance that the Fed will reduce interest rates in the near future.

Expectations
An expected increase in the unemployment rate, and a significant downward revision to labor costs could reduce the Fed's worries that the economy is actually overheating, despite all the signs of cooling. Before cutting rates, economists said, the Fed would also like to see declining core inflation coupled with a rising unemployment rate. "The mounting evidence that growth has slowed further in the fourth quarter is bolstering the case that the next Fed move will be a rate cut -- perhaps as early as the first quarter," wrote Nigel Gault, chief U.S. economist for Global Insight.

Guidance
Mortgage rates retreated for the fifth consecutive week to the lowest level since January of this year. These tremendously low mortgage rates coupled with an abundance of available homes make this a terrific time to purchase a home or refinance a mortgage. As always, staying informed of movement in financial markets and having the assistance of a professional consultant will enable you to take full advantage of the mortgage market.