What Are Interest Rates Going To Do? 8/20/07

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 20, 2007

Present Market Conditions
The Fed's actions last Friday were more than a psychological pep talk to the markets, wrote David Greenlaw, an economist for Morgan Stanley. By extending the term of discount window loans from overnight to 30 days, the Fed created an alternative source of short-term funding for banks, corporations and fund managers. "It's conceivable that the Fed's actions today could go a long way toward restoring liquidity to the markets," Greenlaw said.

Expectations
Despite the Fed's emergency half-step on Friday, financial markets and Fed watchers still expect the Fed to cut the more-important federal funds target rate at its Sept. 18 meeting because the Fed didn't address the underlying weakness in the housing market or the economy. "The worst is now over in financial markets," wrote Sherry Cooper, chief economist for BMO Nesbitt Burns. "These Fed actions show that Bernanke, like his predecessor, is willing to temporarily ignore his inflation objectives to offset a credit crunch. This should leave no doubt in people's minds that the Fed stands ready to backstop the system." This is great news for the mortgage industry.

Guidance
With the current market volatility and the tightening of many guidelines and elimination of some programs, it is a critical time to plan and evaluate your mortgage financing needs. Working with a professional is crucial for proper planning and execution when considering purchasing or refinancing.