What Are Interest Rates Going To Do? 8/13/07

You like me are asked this question often. "What Do You Think Interest Rates Are Going To Do?" You know now here is a customer focused report for Mortgage Market Direction

Week of: Monday, August 13, 2007

Present Market Conditions
The financial markets have been in the media headlines with high levels of volatility over the past week. Although 98.6% of all U.S. mortgages are performing and not late or in default, foreclosure rates are up 30% since 2006 among loans to borrowers with marginal credit. As a result, major investors have begun to shy away from mortgage backed securities. In essence, the entire mortgage debt market is being adversely affected by high levels of "irrational fear". Several retail lenders have gone out of business because they have been denied access to their corporate warehouse credit lines. Consumers can have ample access to purchase homes and refinance existing loans but current market conditions will lower loan to value ratios and raise interest rates on jumbo mortgage loans.

Expectations
Ken Goldstein, an economist for the Conference Board, has said he doesn't believe the sub-prime situation is enough to send the economy off-track. According to Goldstein, though, as long as employment stays strong and workers' earnings grow substantially (4 percent annually, according to him), confidence - and spending - will remain high and the economy will chug along. "Not only is the economy strong enough to survive the crisis, it's strong enough to quiet it," he said.

Guidance
With tightened lending standards and the heightened awareness of the importance of professional financial advice, its in your best interest to work with a knowledgeable consultant when purchasing or refinancing your home.