HomeLoans Blog

I have a professionally prepared mortgage analysis posted to this site each day. Visit Daily Rate Advisory. It provides very good market summary and expert opinion.

The real question though for me is why are rates staying so high when all the economic reports point to an severe economic slow down. Many economists are talking about a global recession.

Weak economic news typically lessens inflationary concerns and pushes mortgage interest rates lower.

The issue seems to be that investors feel the need to hold onto their cash, because of the credit crunch. Big investors who would normally be investing their cash into the bond market with the reports of a declining economy are now more concerned that they will not be able to access the cash for the immediate needs of their businesses.

Rather than purchasing bonds, many are selling bonds to finance their immediate cash needs that otherwise would be covered by short term lending.

This is because of the tightening of the credit markets.

The hope is that the actions of the Treasury Department and the Federal Reserve will unfreeze credit and take pressure off the bond markets.