Mortgage Interest Rate Report - September
Last Updated: 9/3/2008

Mortgage Rate News

Through the last four weeks, fixed mortgage interest rates stabilized, then dropped about an eighth of a percent.

Analysis

The "new" media (the mass appeal of the internet is over ten years old now) is overtaking newspapers. Newspapers are cutting costs associated with printing the newspaper in with the hope that they will attract more viewers online. People are going to their computer screen when they want information. That information comes from "narrow-casting", not broadcasting.

The reason I include this as an example is simply that American businesses, wherever possible, are cutting costs - not because they want to, but because they have to. They have to keep up.

What feels like a recession (but is not yet actually a recession) is speeding up the process. Owning the house you live in is still the most-sure way to wealth in America, even if that value might go down right now. Taking out cash on constant refinances is not the route to wealth. Owning many houses and treating them like liquid assets (such as the stock market) on a speculative bubble is not. Buy your house and own it for a while. Take out cash on refinances or home equity lines of credit when you need it - not when you can simply because you have the ability because the mortgage market makes it easy.

Refinance when you can cut your rate and term.

I hope that Americans are learning that lesson.

The dollar is starting to trim its slide, maybe even improve. Consumer spending - two-thirds of the economy - is slower (it is actually down when adjusted for inflation). Business spending advanced because of lower prices for commodities. Personal income dropped. Exports grew because of the weaker dollar, resulting in economic growth during the second quarter being revised up strongly from 1.9% to 3.3%. Poverty went up in 2007. Qualified professionals are hard to hire when they are young because of unrealistic expectations and baby boomers keep leaving the workplace.

Consumer confidence is up slightly and it was up last month, too. So is the economy stuck in neutral, will it go up, or will it go down? Is inflation a problem in the USA, as it appears to be around the world? One indicates the general trend of interest rates and the other indicates what will happen soon. They appear to be at odds with one another.

Interest Rate Prediction

Mortgage interest rates stabilize and are likely to remain stable for a while. However, if inflation is not controlled, the long-term direction for interest rates is up. No one can guarantee economic or interest rate predictions, of course.

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