Monday, December 11, 2006

What Are Interest Rates Going To Do? 12/11/06

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 11, 2006

Present Market Conditions
Data on the U.S economy continues to send conflicting signals ahead of this week's Fed meeting. November's payroll information was mixed, with an increase of 132,000 jobs being offset by an increase in the unemployment rate. This dichotomy occurs when more people enter the workforce than were able to find jobs.

Most economists expect the Fed to leave the discount rate unchanged at 5.25%, maintaining a stance that higher inflation, not slower growth, is the biggest threat to the economy. Continued higher unemployment figures could trigger the lowering of interest rates, but it will take more than one month of rising joblessness to persuade policy-makers that growth is stalling. John Silva, chief economist at Wachovia, states "I dont think that you have enough economic weakness to really get the Fed to ease (interest rates)," echoing the sentiments of most analysts who expect the first lowering of interest rates to be delayed until the first half of 2007.

Mortgage rates declined for the sixth consecutive week, almost equaling the lowest rate of 2006. 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.

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