Mortgage Rates Remain Unstable

Nov 7th, 2008 @ 5:00 PM by Alden Smith

With the election behind us, we will wait with great anticipation to see what happens on January 20th, 2009. In a press conference today, President-elect Obama reminded us all that this is still not his watch, and until it is, we have to be aware that the current administration will make the shots. Be ready.

The stock market is swinging wildly – up and down, and up and down. It remains in negative territory. The goods things that the stock market is seeing is bargain hunters snatching up prime stock for bargain basement prices. Any cash injection into that market right now is a blessing.

The mortgage market is taking its own up and down slides. Rates have run up to 6.46 percent with 0.7 point to 6.20 percent and 0.7 point, according to Freddie Mac. We certainly see no stability here. Twice in the past four weeks, the fixed rate mortgage has seen huge spikes up to 6.46%. It seems as if the market is trying to find a resting place. It is very hard for this to happen when there is so much turmoil in the economy right now. According to commentary on the NBC Nightly News, we are in the greatest recession since WWII. Anyone who has an even slight interest in the markets can take that to the bank.

Frank Nothaft, Freddie Mac vice president and chief economist said, “Mortgage rates fell this week amid new indications of a pullback in consumer spending and a weaker jobs market. The economy shrank by 0.3 percent in the third quarter, led by the first decline in consumer spending since the fourth quarter of 1991. In September alone, consumer spending fell by the most since June 2004. More recently, job layoffs more than doubled in October compared to September on year-over-year basis.

With the economy contracting and experiencing record home foreclosures, lenders tightened their credit standards further, according to the October Federal Reserve Senior Loan Officer survey. Approximately 70 percent of banks raised their lending standards for prime mortgages and about 90 percent of banks that offer nontraditional mortgages did so as well.”

From what the Nightly News tells me, the market may be loosening up a bit, with credit a little easier to obtain. Until that happens and money starts flowing again, I doubt we will see any kind of stability in any of the markets. The News tells me that people are hunkering down, and even luxury items are not selling. When that happens, we can be sure that things are indeed not quite right. About all we can do now is wait until Obama takes office, and see what he does with all this. To my way of thinking, it is going to be tough sledding for our new President. He hasn’t been left a very good legacy. He advocates for change. Let’s see what he can do with that.

Posted in Mortgage Refinancing, Mortgages
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