The DOW opened this morning below 12,000 for the first time in a while. This, as a result of last week’s jobs report of a loss of 63,000 jobs, and analysts’ latest reports of a pending recession, has been benenficial for bonds and mortgage rates today.
Economists are predicting retraction of the economy over the next two quarters which would mean a recession. Housing is recovering much more slowly than initially predicted and lenders are losing value in there existing home loans. Inflation has taken hold. Oil is over $100 a barrel and more Americans are losing there job as a result of a contracting economy. As we have said before often a recession is realized and talked about after the fact. In real terms we are currently in a recession. And as such mortgage rates should creep higher as a result. However because of the excess inventory, a retracting economy, the sub prime mortgage write downs and the current tightness of the credit markets, we see opportunities in many areas of the country for homeowners and investors alike to benefit long term from real estate purchases.
We will look to the results of Retail Sales reporting on Thursday and Consumer Pricing and Consumer Sentiment reporting on Friday to further confirm the current direction of our economy or suggest a change.
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Stay tuned and stay in touch with your mortgage professional. Thank you for the opportunity to serve you and your clients. David. 919.851.0999.