State of the Market

Simply put, figure on higher mortagage rates by spring, with 30-year fixed loans in the neighorhood of 6%.  Even higher if the recovery is stronger than now expected and businesses start selling corporate bonds to fund capital investment projects.  The upward push will come as the Federal Government quits buying mortgage debt.  Right now, the Federal Reserve is buying about 80% of home mortgages being written, filling in for a largely absent private secondary market.  But its effort to curb rates and prop up the housing market is slated to wind down between now and March 31, 2010.   

In the long haul this correction will be better for the consumer and the markets.  Consumers pulling back and restoring balance to the US econonmy after a binge of credit driven spending will only enhance our chances of a solid recovery.  Hopefully in the not to far distantant future we will return to a healthier growth pattern with less dependency on borrowed money.