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Sacramento Mortgage Rate Update: Room for Improvement
According to Freddie Mac’s weekly survey, the 30 year fixed rate ended the week at an average in the Western U.S. of 6.67 at .6 points. That’s moving the right direction.
Beneath the Numbers
The Countrywide earnings announcement this week touched off a broad sell-off in equity markets around the globe as investors fled to the safety of bonds. CEO Mozilla’s comments sparked latent fears that the whole mess cannot be contained and is spilling over to affect corporate earnings, consumer spending, and liquidity in general.
As earnings deteriorate, corporate credit spreads—the difference between a corporate bond’s yield and the yield on a Treasury note of comparable maturity—have widened, reflecting investors uneasiness about the effects of the subprime problem.
Meanwhile, GDP, Michigan’s Consumer Sentiment survey, and core personal consumption expenditure—the Fed’s favorate gauge of inflation—all reported weaker numbers than expected. Consumer spending in Q2 was significantly weaker than in Q1.
What’s It All Mean?
There is hope for lower rates, and we may need that to stay ahead of the slowing economy as real estate takes a bigger toll on the consumer and corporate earnings than some were willing to admit previously.
July 28th, 2007 at 8:00 am
We can all hope for lower rates, but I am doubtful that we will see them for some time. The costs associated with default servicing and foreclosure will surely keep the overhead high for the banks. a top Mortgage Banker has temporarily stopped lending on their own lines this week and will continue doing business only through their broker programs due to the changes in costs to maintain those lines. The best we can hope for is that rates stay where they are and not go up because of the costs. And let’s get real people less that 7% on a 30yr fixed is still cheap money…..we can add some fuel to the fire as well. We have an election coming, depending on who makes office, that could seriously swing the economy in the short term.
July 28th, 2007 at 9:23 am
I agree Michelle. Credit spreads are widening, so even if the Fed cuts short term rates, long term rates (think 30 yr fixed mortgage) will NOT follow suit. Rates ARE low; people are spoiled by the last few years.
July 28th, 2007 at 2:40 pm
I agree that rates are good now. We’ve lost perspective after flirting with 40-year lows a while back. As long as they don’t climb too much, we’ll have a stable platform on which to eventually regain our footing.
August 1st, 2007 at 7:41 pm
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