An approximate 1/4 point Fed rate cut looks like a done deal for the next Fed meeting after economists began talking in earnest this week about a recession due to the housing slump and the media fueled sub-prime mortgage crisis. With over 77 million baby boomers retiring over the next 10-20 years expecting a large portion of their retirement income from equity in their home, even the president got on board this week. The bottom line is social security has been in trouble for years, pensions are becoming extinct, and if the value of your home drops 20-40 percent, the Fed will not be able to stimulate the economy with a 0% interest rate.
Stocks were not overly impressed with the president’s vow to help homeowners, treasury yields dropped slightly and mortgage backed bond yields increased slightly. This coming shortened business week will end with unemployment figures, jobless claims and hourly earnings will reporting on Friday. All of these are of high importance to mortgage interest rates. Stay tuned and thank you for the opportunity to serve you and your clients.