In July of 2006 we saw the housing market top in the United States.  This chart is a great depiction of the fall we have seen.  I know there were many analysts out there who predicted a housing bubble, but did they ever guess the financial 911 we have seen.  It has definitely been an interesting road that we have taken along the way.  Who can believe that the beginning of the fall of Bear Stearns started exactly two years ago?  There was a great piece by Charlie Gasparino expressing where the Bear Stearns guys are now.  The buying of mortgage backed securities and subsequent decline in home prices sent almost every single Wall Street financial firm into a free fall and we may not recover for a very long time.

I am sure many of you have felt the affects of this on your 401(k) or other personal investments.  The only saving grace that some of you may have is that you had the opportunity to refinance at extremely low mortgage rates.  I am sure this does not make it any easier to swallow the fact that your investments have, most likely, halved themselves.  For anyone who is wondering exactly what happend to cause this disaster, I urge you to watch “House of Cards” a documentary on CNBC.  It explains just how silly these Wall Street firms were and basically points out that 9/11 was one of the major causes of the subprime mortgage crisis.

I urge you to tell your friends and family about the site so I can continue to get information out to as many people as possible.  If you own a financial website, please contact me as I am always looking for good content to read and link to.  I will do my best to produce some great content over the coming weeks.  I am planning on doing many articles this weekend so please check back in.  If visits continue to increase to this site, more articles will be produced for your enjoyment.

Once again, thank you for reading and please tell others so we can spread the word on the truth about the mortgage and housing market.  I will be sure to have a rant sometime soon as it has been awhile; in the meantime, check out this one: Subprime Will End Bank of America.

There was a very fitting article over at Calculated Risk on Wednesday.  In the article, the author illustrated the point that mortgage rates and 10 year yields have had a very high correlation since 1971.  From historical data, the current ten year yield of 3.7% suggests a 30 year mortgage rate around 5.6%.  Yesterday, Freddie Mac reported average mortgage rates at 4.91% which is a jump of .09% from last week.  This totally caught me by surprise until I looked at the 10 year yield, now it seems quite obvious that mortgage rate trends are going to cause rates to head higher for quite some time.

This is quite an interesting time as never before in the history of the United States has the concept of the government buying back mortgage backed securities (MBS) been the case.  With so many trillions being wrapped up in mortgage backed securities, the government decided to start buying these up.  The idea was that the purchases of MBS would force mortgage rates lower which would a cause a spark in interest in the housing market.

For almost two full months mortgage rates have been under 5% and been steadily decreasing.  Mortgage rates continued to decrease even when the Ten Year Treasury Yield was increasing; this almost never happens.  The interactions of the government were creating false mortgage rates but in the long run free markets will determine true mortgage rates.  We are now seeing this as mortgage rates bounced last week and I would predict that we will continue to see rates head higher as the ten year treasury yield remains in an uptrend.

What does this mean for the overall housing market?  Bad news!  Ben Bernanke and President Obama were hoping to spark the interest of new home buyers by offering them many tax benefits and the chance to get a new home at mortgage rates unheard of from a historical perspective.  Well, home buyers will still get the $8,000 tax cut if they purchase before December 1st, 2009 but it looks like those low mortgage rates have come and gone.

Will the rising interest rates hurt the overall housing market?  How could they now?!?  If individuals were reluctant to buy a home when mortgage rates were 4.8% then who is going to buy a home when mortgage rates are headed back to 5.5%?  That could be the difference in over $50,000 in interest over the course of a 30 year home loan.  I am not sure where the next idea is going to come from for the current administration but I sure hope they have a few tricks up their sleeves.

It has also been reported that most of the foreclosure modifications are defaulting.  Once again, this is very bad news for the housing industry.  If more homeowners are getting foreclosed upon there will be much more supply on the market.  Housing supply is exactly what this country does not need.  In a bit of good news, April Housing supply came in at 10.1 months versus 10.4 months last April.  This is a step in the right direction but we still have TEN months of housing supply on the market.

In April we had historically low mortgage rates, the Making Home Affordable Plan was in effect, tax credits were given to new home buyers and President Obama was encouraging all new home buyers to get out and buy that new home.  With all the measure taking place, we still only saw a nine day drop in housing supply?  I am extremely worried that the measures taken by the Federal government are not only not working, but they are devaluing our currency.

By buying back TRILLIONS of dollars in mortgage backed securities the US Dollar is falling off the face of the earth.  As I sit in my office I see CNBC talking about the dollar right now and how it has declined under 79.  Before the move by Ben Bernanke to buy mortgage backed securities, the US Dollar was at 87 and in a strong uptrend.  Since then, the dollar has seen a steady decline below the 200 day moving average and it looks like support is nowhere to be had.

So, the housing market remains in extreme trouble, the US dollar is tanking and the unemployment rate continues to rise in most states.  This economy is getting better?  Umm, I would love for someone to prove to me, with DATA, that the economy is actually getting better.  I know most data is a predictor of the economy, but there is nothing to prove that things have turned around.  Yes, the stock market has seen a steady increase over the last three months but that is on the hope that earnings will come in better than expected.  Have any of the major United States corporations actually shown that they are producing strong earnings?

Let me answer that for you, NO!  Hell, today the government decided that the taxpayers should own GM.  Thanks a lot, just what I want, to own another shitty company that is going to waste taxpayer dollars.  So lets see, the taxpayers now own Freddie Mac, Fannie Mae, AIG, and GM.  Bankruptcy is essential to free market capitalism, let these companies go bankrupt!  We, the taxpayers, do not want our hard earned money to go towards propping up companies that have been extremely unsuccessful.

Overall, the government has done everything in their power to create false mortgage rates but the free market will ultimately win out.  When this happens and mortgage rates go back to 5.5% we are likely to see another strong downtrend in the overall housing market.  This is very bad news for current home owners but it is the truth.  The best case scenario is to not worry about the overall value of your home but enjoy what you have.  Mortgage rate trends have reversed and are likely to head higher, so please expect home values to decline with this being the case.

• Mortgage Rates Forecast – How Low Will Rates Go?
• Low Mortgage Rates Not Helping as Home Prices Slide In March
• Home Loan Modification Will Help Stop Foreclosure

There is very little debate concerning the overall direction of mortgage rates.  Most of us realize that the long term direction is down.  The question that most people are asking is just how low will mortgage rates go?  Back in January, Bill Gross predicted mortgage rates under 4.5% and he looks to be correct.  Is 4.5% the lowest we will see rates?  I would argue that rates might get all the way to 4% before the government stops creating false interest rates.

Anyone who believes that the free markets have pushed mortgage rates below 5% would be fooling themselves.  The only reason mortgage rates are at historical lows is because the Federal Government feels that low mortgage rates will help America get out of the housing crisis.  In turn, the economy will turn around because home values will start to increase instead of decrease.  I totally agree that housing will bring us out of this global recession, but I disagree with the government creating false mortgage rates.

If mortgage rates are low, there should be a spark in interest in the overall housing market, correct?  Well, that would be true MOST of the time.  When I say most of the time, I mean when the economy is in decent shape and the unemployment rate is not growing.  With the unemployment rate growing, many Americans are quite unlikely to sink their money into a $200,000 home that could lose 10% of its value in the first half year that they own it.

There is little doubt that there is quite a bit of money to be made in the current housing market, but most common Americans do not have the superior knowledge to make money on housing right now.  Even the smartest housing experts are having trouble picking and choosing the right homes in the right markets to get any return on their investment.  Most of the major metropolitan cities, 18 of 20, have seen falling home prices from the month of February to the month of March.  All of those cities have seen a decline year over year; some markets are down well over 40% from their highs in June of 2006.

With this knowledge, we must analyze the overall mortgage rates forecast.  The government feels that low mortgage rates are going to pull the housing market back to prosperity.  Well, if the unemployment rate continues to increase and the overall economy does not quickly get out of this recession, the forecast for mortgage rates looks to be a continued downward trend.  That downward trend is likely to continue until President Obama, Ben Bernanke and the entire Obama administration feel that the housing market has seen a bottom.

There is no possible way that anyone can truly believe that housing has seen a bottom.  This means that the government is going to continue to sink trillions of dollars into mortgage backed securities to create extremely low mortgage rates.  To determine how low mortgage rates will go we must make a decision on when we feel the economy will get better.  Some have predicted that by the end of the year we will see a turn around in unemployment and many major corporations will start to see profits increaes.

Once again, I am not sure I agree with this assessment.  If corporations have just started laying people off, it is going to take them some time to understand how to make money with a smaller staff.  There is no arguing that major corporations are learning how to save money by laying off workers, but are they going to be able to provide the same goods and services they once did with half of the staff.  This will not happen overnight and will cause many companies to “rewire” their overall business strategy.

Most reputable corporations know that it is going to take at least a year to change the way things used to be run.  A year from when lay offs started would be February of 2010 for most companies.  So, at the beginning of 2010 we are likely to see major American corporations start to turn things around.  Does this mean that the unemployment rate will drop?  I seriously do not think so.  Once these companies have started to turn things around, they are not going to want to sink money back into payroll as they have the recent memories of being overstaffed and not making enough money.

Overall, the economy WILL get better.  I hope it happens sooner rather than later, but it will definitely take time.  For those of you who have been smart with your money, you will benefit greatly from this economic downturn.  You will get sales on everything you could have ever wanted AND a mortgage rate under 4.5% is likely.  The problem is that many Americans are not in this boat, that is why the overall economy is in such bad shape.

If I had to make an educated guess at how low mortgage rates will go, I would say they will hit 4% and then see a bounce.  I think this is likely to happen in the spring of 2010 as that is when the overall economy might see a jolt of energy through renewed earnings from the major United States corporations.  With that being said, if you are considering refinancing or buying a new home, I would not wait as you never know when things can turn around.

The one thing that makes free markets interesting is that no one ever knows what is going to happen.  Most of the time, we do not realize we have seen a bottom or top until months after it has happened.  The same holds true with the stock market.  There were very few analysts, minus Jim Rogers, Peter Schiff and Gereld Celente, that predicted a market top back at the beginning of 2008.  Everyone was extremely optimistic and felt that there was no financial crisis.  I guess we all learned that lesson quickly.

• Low Mortgage Rates Not Helping as Home Prices Slide In March
• Home Loan Modification Will Help Stop Foreclosure
• Mortgage Rate Predictions – Rates Lower to Historic Levels?

Mortgage rate predictions have been quite accurate in the last few weeks as I have correctly picked the bounce off of 4.78% and then two weeks later the reversal back to 4.82%.  I think we have seen an intermediate top in rates a few weeks ago when the Freddie Mac weekly survey reported that rates were at 4.86%.  I am sure many analysts and chart technicians feel that 5% will serve as a ceiling; I just do not see that happening.

With that being said, I think rates will continue lower next week but not by a large amount.  The Fed is still committed to purchasing mortgage backed securities but they have lightened up greatly with this commitment.  They are still going to fulfill the $1.25 trillion they intialed set out to buy, but it seems that they are going to do it in small increments rather than in large chunks.  By buying back MBS in smaller increments it means we will see gradually declines in overall rates rather than large fluctuations.

Last week’s mortgage rates came in at 4.82% which was just .01% off of my prediction of 4.83%.  This week I predict that we are going to edge even closer to that all time low that many media outlets have been talking about for months.  This week’s mortgage rate predictions are:

30 Year Fixed Rate Mortgage – 4.76%

If this were to happen, it will be very interesting to see how the national media takes it.  This would be about as close as we have come to an all time low since March and it would likely be national headline news if mortgage rates did break the all time historic record for lows.  There are sure to be many interesting perspectives that will come out of this if it does in fact happen.

Even if mortgage rates do not hit the historic low this week, it is likely that we will see it in the weeks to come.  The only reason we would see a true bottom in mortgage rates is if the housing market sees a drastic improvement.  Unfortunately that is just not the case in the current market.  Home prices are continuing to decline and we are still seeing an abnormally high number of foreclosures and short sales.

President Obama is doing everything he can come up with to make the housing market better but the economy is not helping at all.  Most major corporations are continuing to lay off workers and the economy is not getting stimulated by those who actually do have money.  It sure seems the case that those who do still have money are the ones who have always been smart with their financial decisions and saved.  It is these frugal individuals that are helping keep the economy afloat, but they are doing little to actually “stimulate” it.

The individuals that were stimulating the economy during the 1990s and early 2000s are the same ones that we would consider subprime borrowers today.  They are the ones who maxed out their credit cards and made sure that they had their hand in at least two properties.  It is now the case that this individual is broke and looking for a job.  Unfortunately, if they do not have a job, they are finding it extremely difficult to make ends meet as very few financial institutions are willing to cut them any slack because of their bad financial decisions.

It will be interesting to see if the frugal individual that has been saving from day one will actually do his or her part to stimulate the economy.  I honestly feel it is not in their blood to spend a great deal of money.  I have many friends who are this way and they will never make large purchases no matter how much money they have.  They will continue to drive the 2001 Honda Accord that they bought used.  They will continue to live in the same house even though they could afford a mortgage of at least $100,000 higher.

These particular individuals are the ones that could get amazing deals in the current economy.  As one of my best friends likes to say, “now is the best time to spend great amounts of money because everything is on sale.”  This is definitely the case as corporations are trying to do anything possible to make an extra dollar or two.  If you have been thinking about taking a vacation, this year might offer the cheapest vacations ever, even to exotic locations.  If you have thought about buying a new car or boat, this might be the year as many of these companies are going out of business.

Most activities and objects that cost over $2500 are greatly discounted in the current economy; including houses.  The excess amount of housing inventory on the market is causing prices to plummet.  If you have been considering buying a house but have been reluctant in the past; this may be the year for you to buy that house.  Many home owners that are trying to unload homes are willing to take an offer well below the listing price just to get some money out of the house.

Now that you know mortgage rates are likely to head lower, it is a great time to start zeroing in on the exact house you want.  Even if the price is not exactly what you want, you may be able to wait a few months and over a price that would be well within your means.  It is not likely homes are flying off the market left and right so make sure to be patient with your decisions.

There is an unbelievable amount of information on the internet so please do your best to educate yourself before going into the home buying process.  By doing a quick google search and looking through some mortgage blogs you will do yourself a huge favor.  It may save you $10,000 in the long run if you actually take these steps early in the purchasing process.

• Economic Crisis – Recession with Rising Interest Rates and Rising Inflation
• Home Loan Modification Programs Will Help You Save Money
• Will Low Mortgage Rates Help the Economy?

Prior to the home loan modification program Making Home Affordable, individuals who did not have at least 90% loan-to-value in their home found it extremely hard to refinance.  That is no longer the case.  The government is giving incentives to mortgage lenders to offer low refinance rates to individuals even if their loan-to-value ratio is above 100%.  The highest ratio that most lenders are willing to tolerate during the refinance process is 105%.

With a great number of homes being underwater throughout America, this is something that could greatly assist those who want to refinance.  Most homes that are underwater have lost value because their has been a foreclosure or short sale in the area nearby.  It is also the fact that there is no longer a heavy demand for new homes.  Unfortunately, home builders went above and beyond during the housing bubble and built way too many new homes.  We have to find a way to get those homes off the market.

Now that Americans have a much better chance of getting a low refinance rate it should help in stimulating the economy.  No one really knows what it will do to the housing market, but if Americans have more money in their pockets that is always a good thing.  I think most Americans learned that spending all their money on everything and anything they wanted is no longer a smart decision.  In the 1990s and early 2000s if you wanted something you just bought it on credit and worried about the bill later.

Well, that was fine when the unemployment rate was well below 5%.  Now that the national unemployment rate is making its way to 10% spending habits must change and they have.  Only the essentials are being bought at retailers.  Families are no longer buying superfluous items just to decorate or feel good about themselves.  The one good thing that this economy has done is that it has taught people that saving money is a very important part of life.

If you can refinance a full percentage point below your current mortgage, you are definitely going to save quite a bit of money.  Now that the government has gotten involved it is time to actually seek out the refinance you have been thinking about.  Getting a home loan modification is no longer the struggle it used to.  There are several websites available and Making Home Affordable will tell you everything you need to know about getting a new rate on your current mortgage.

Do not be fooled into believing that just because the government is involved that you will get a rate under 4.75%.  The low rates that are being advertisted all over tv and the internet are for those who have been extremely smart with their financial decisions.  If you have a credit score under 740 or have any long term debt that might hinder your ability to make your mortgage payments, it is unlikely that you will get an extremely low rate.

This does not mean that you should not try to get a lower rate.  You never know what the mortgage lender may think until you actually put in the application and see what happens.  You might get lucky and find out that the lender has been strongly urged by the government to complete 1000 applications by the end of the week.  There are many extenuating circumstances that are coming up because President Obama is taking action and changing the way mortgage lending is conducted.

The other important aspect about the home loan modification program Making Home Affordable is that home owners are only going to have to pay 31% of their monthly salary in a mortgage payment.  If your mortgage is backed by Fannie Mae or Freddie Mac, which almost 70% of mortgages are, then your mortgage payment should adjust based on your monthly income.  If over 50% of your monthly income is going towards your mortgage payment you are prime candidate for Making Home Affordable.

The idea behind this is that if Americans are using such a large portion of their paycheck to pay for a mortgage they have very little money to spend anywhere else and stimulate the economy.  Also, if your mortgage payment is over 31% of your monthly income, the odds of defaulting increase greatly.  A high mortgage payment can take a large toll on any financial situation and President Obama does not want that to be the case in this economy.

If your mortgage amount does decrease, it will not stay that way for the remainder of the loan.  Over the next few years, you will see it gradually work its way back to the original monthly mortgage amount.  Hopefully by this point Americans will have saved some money and be on their feet better financially.  If that is not the case then maybe they should just not own a home outright.

There is very little doubt that President Obama is doing everything in his power to give Americans a better life.  Signing into law Making Home Affordable was one of the first steps to making this happen.  I would encourage anyone seeking a home loan modification to do extensive research at MakingHomeAffordable.com.  There is a great deal of information on the site and it will take many days to get through it all.  Educating yourself and figuring out what the government can do to help you may save you hundreds of dollars a month so take the time and do it!

The most important thing about Making Home Affordable is that it is an attempt to help Americans change.  We have lived well above our means and made very bad financial decisions in the recent past.  This needs to change and the current recession is helping us figure that out.  President Obama is also helping us by taking every step to stimulate this economy and help continue to make America the best country in the world.

Another major breakthrough that was created by the mortgage blog was the exposure of bad lending practices and companies that were imploding during the subprime mortgage crisis.  It seemed at one point that we all asked the question, “Who is the next mortgage lender to go under?”  Well, those questions were answered as the blogosphere had many connections inside the corporations that had made horrible decisions and paid for it.

My personal favorite feature of mortgage blogs is the opinion that is allowed to roam free.  There are many social networks that encourage this such as Reddit or Propeller.  No matter how great of an article I write, there is always critiscism on these sites and that is good!  I will never claim to be the best writer or the most knowledgable individual when it comes to the mortgage market.  I do have experience and I like to state my opinion which some people do not like.  The good thing about it is the fact that I can state that opinion and my voice is heard in one way or another; even if that voice is squeeky and a little bit inaccurate.

There are some great mortgage blogs that I read on a daily basis to get a lot of my information and statistics.  Those blogs include:

Mortgage Lender Implode-O-Meter

Option Armageddon

Mr. Mortgage’s Blog

Calculated Risk

Zero Hedge

Huffington Post

Housing Bubble Burst

You may say that most of these blogs are extremely negative on the current real estate and housing market.  Well, that is true, but open your eyes and realize that is the truth!  Since the housing market started falling apart, these blogs were on top of it the whole way down.  Unfortunately, the downward movement still has a long way to go in my eyes.

I also get a ton of information from the Bureau of Labor Statistics as most of you know I am very interested in the direction of unemployment.  While many people feel that unemployment lags the economy, I actually think it is a predictor of the economy, stock market and housing market.  It makes sense that if people have jobs and are making money, they are likely to sink it back into the economy of invest it in real estate or the stock market.  If they do not have a job, they either have no money to spend or they are saving every penny they earned because they do not have a steady income.  Ultimately, we will not see the bottom of this housing market until the jobs start coming back.

I know President Obama is creating thousands of government jobs but those are not the type of jobs this country needs right now.  We need private industry jobs that create wealth for shareholders and private investors.  When we see those jobs start to increase, it is possible that we will be out of this mess, but until then, the mortgage blogs will continue to ramble on about the struggling economy.

Last week, mortgage applications rose due to the interest in for home refinancing loans.  Although overall applications were up demand for home purchase loans was down.  The spring is the peak of buying season so the hit that home purchase loans sees may be a strong indication of where we are headed in the housing market.  The Mortgage Bankers Association said its index for mortgage applications rose 2.3% last week.

In the same set of data the MBA stated that average mortgage rates dropped to 4.69% which is just above the all time low that was set in March.  Last year at this time rates averaged 5.9%.  Overall, the four week average of mortgage applications was down 6.4%.  It seems very clear that refinancing is the only thing carrying mortgage applications in the current market; very few people are buying new homes.

As many of us have said in the past, this economy is not going to get better until people start buying new homes.  With many loans set to reset in the coming months, it will be very interesting to see if there are any glimmers of home in the near term.  I personally do not see the overall housing market getting better as there is very little new money coming into the arena.   In all reality, there is much more money coming out as home values continue to drop and current home owners are refinancing at lower rates making their payments less.

On a side note, here is a very interesting chart on the S&P 500 as it relates to gold.  As many of you know, I am a firm believer that the commodities bull will extend for many more years and there is HUGE money to be made as inflation will hit hard.  If you want to invest in something besides real estate, now is the time to get into commodities.

UPDATE: The most recent mortgage rates forecast article can be found here: Mortgage Rates Forecast – Interest Rates Stay Around 5.15%.  Mortgage rates have been quite volatile lately so it is a good idea to stay ahead of the crowd by knowing where overall rates are going.  Make sure to use Subprime Blogger to get all your mortgage rates information. 

The July 19th mortgage rates forecast article is available here: Mortgage Rates Forecast – Where Will Interest Rates Go in August? The 10 year treasury rate got a huge bounce of over 10% last week so that means average mortgage rates are headed higher. How much higher are they headed? Check out the article to find out!

The July 5th edition of newest mortgage rates forecast is available here: Mortgage Rates Forecast – Rates Move Higher This Summer? I personally think that we are likely to see mortgage rates move higher over the second half of the summer as the 10 year treasury rate is at a strong support level.  The government will do everything in their power to create artificial mortgage rates, but eventually the market is going to set interest rates.  For the sake of the overall economy and the health of the housing market, we should hope for low mortgage rates, but it doesn’t seem likely at the moment.

July 3rd – The newest article for current mortgage rate trends is available here:  Mortgage Rate Trends – Will Rates Go Higher in July? The month of July is going to be very interesting for average mortgage rates as the 10 year treasury rate is near the bottom of its upward trend channel.  If the 50 day moving average holds as strong support, we could see the 10 year moving back towards 4% which would mean that daily mortgage rates could reach 6% before the end of the summer.  Only time will tell, but it will be interesting to see what happens after the July 4th Holiday Weekend.

June 29th – This weeks mortgage rate predictions article has been published here: Mortgage Rate Predictions – Rates Find Support this Week? Remember that on Subprime Blogger we are going to release daily mortgage rates and how they correlate to the to 10 year treasury rate; please check back in every morning to get a prediction of where rates are headed based on the daily trading moves of the 10 year treasury rate.

June 23rd – I recently updated my newest article on mortgage rate predictions, please check it out and share with friends: Mortgage Rate Predictions – Rates Remain Stable

Mortgage rates jumped to 5.29% this week, June 3rd, and seem to be headed higher.  Make sure to stay up to date with mortgage rate predictions and mortgage rates forecast so you know where mortgage rates are headed.

June 6th – There is no denying that the 10 year treasury yield is continuing its uptrend so it looks like the mortgage rates forecast is an uptrend in rates that is going to follow the yield.  I would be very surprised if rates buck the trend that the yield has created.  The question that me must now ask is “is this good for the overall housing market?”  If mortgage rates go up, home prices are going to fall, but haven’t home prices fallen enough to help this market?  If you are trying to sell a home in this housing climate it is going to be very interesting to see how you fair.  I wish you the best of luck, but you are likely going to have to lower your offer due to higher mortgage rates.

May 19th – Today we learned that new housing starts and permits came in unexpectedly low.  Housing starts were down 54% when compared to last year.  Some feel that this is showing that the housing market has not stablized.  Honestly, this is the BEST thing for the housing market.  Builders should have slowed housing starts a long time ago before the new housing supply got all the way up to TWELVE months.  We have to get rid of the inventory we have before we start building even more.

If we continue to see new housing starts and permits lower, it will be a very good sign that the home builders have finally figured out that there is a supply/demand imbalance in the market.  I am not really sure why it took so long for the homebuilders to realize this, but that sure seems to be the case.  Overall, this is great news for the housing market but not so good news for mortgage rates.

As soon as the government starts to see a stabilization in the housing market, they are going to stop buying mortgage backed securities which has caused mortgage rates to plummet.  While this is something that may happen in the distant future, it is going to take SEVERAL months of lower housing starts before this takes affect.  With that being said, it is still a great time to go out and get that first mortgage or to refinance your current one.

After several weeks of cutting back on buying mortgage backed securities, the Federal Reserve Bank has to decide what their next move is going to be.  If they continue to slow their purchases, it is likely that mortgage rates are going to slowly rise which will diminish the interest in the housing market.  If they continue to sink large sums of money ($50 trillion) into MBS mortgage rates are sure to go down, but has it even made a difference so far?

We do not have the Case/Shiller Index data from the months in which mortgage rates were under 5%.  The data available is from February and that continued to show decline in home value; a 31% overall decline from the top in June of 2006.  Everyone can make their own assumptions as to what has happened since February, but has anyone seen a rise in their home value?  Honestly?  I would say only a very select few markets have even seen a stabilization.

Well Ben Bernanke, this is what you get paid to do, so let’s hear what the next move is…