Wednesday, November 07, 2007

Oh SHIT

WASHINGTON (AP) -- Mortgage application volume fell 1.6 percent during the week ending Nov. 2, according to the trade group Mortgage Bankers Association's weekly mortgage applications survey released Wednesday....

The average interest rate for one-year adjustable-rate mortgages increased to 5.94 percent from 5.93 percent a week earlier.

Click on the heading for the rest of the article

Mortgage rates are partially determine by supply and demand. If demand falls the need to lend out the money becomes more competitive and rates fall. Of course there are many other factors. The Fed has some say in rates by encouraging banks to borrow from them and pump money into the ten year notes. Which they have done. So if both demand has fallen and the feds have dropped the intra-bank rate why would mortgage rates go up?

Oil is at an all time high. Trucks get 4 miles to the gallon. Cement is made by cooking lime at 3,000^F, polyester fabric is petroleum based. The list goes on and on. INFLATION OF THE COST TO PRODUCE AND SELL GOODS IS ABOUT TO ROAR TO LIFE. The Feds are now officially backed into a corner. Future rate cuts don't look good. Might even see the more stable economies in the world raise their rates.

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