Thirty year fixed rate mortgages see a drop this week after rising for five straight weeks. The national average for 30-year fixed-rate mortgages fell to 6.35% from 6.45% a week ago. The 30-year loan averaged 6.63% last year at this time. 15-year fixed-rate mortgages dropped to 5.92 percent from 6.04 percent.

This of course does not take into account points, which are running around 0.6 points this week.

I found interesting comments on this news, and see everything from jubilation to skepticism.  A gentleman commented that “A tenth of a percent is hardly a drop, I would be more impressed with a half to three-quarters drop.”  Another: “That’s it. The bottom’s in!”

Hardly.  Hate to spoil the good news, boys and girls, but we haven’t seen anything yet.  It will take a lot more than a tenth of a percent to turn things around.  Right now, people are hunkered down, waiting for the other shoe to drop.  Drop it  will.  Whether it lands right side up or belly down remains to be seen.  There are too many other factors right now that need to be taken into account before it is all fair skies and good weather again.   Take into account, for example, the horrendous flooding in Iowa, with thousands of acres of corn and soybeans under water, and no way for farmers to get them replanted this season.  Take into account the rising price of food, and the pain at the pump.  Consider that this is an election year, and who knows what way the wind will blow on THAT.  Heard the percentages on consumer confidence lately?

Also to be considered is the fear in the banking system of credit ratings.  Although I find that practice a bit unfair to many people, it is an indicator of how the sentiment is in the banking industry.  Not many average people today have a 720 credit score, and that only points to the fact that there will be houses left unsold, people living in homes they cannot afford, and builders going belly up.  It is a mix of everything that needs to be looked at, not a simple tenth of a percent decrease.  And we all know that this can change overnight.  Once again, we wait and see.

Today is the Fourth of July.  I am vacationing sans wife in Anderson, Indiana, and enjoying the company of son and daughter in law.  No fireworks for this tired old vet, but a wish to the readership of a well celebrated Fourth.