Economist's Commentary: October 13, 2008

Quick Take on the Economy: October 13, 2008

By Lawrence Yun, NAR Chief Economist

Another day, another big swing. Fortunately, it is an upward swing this time.
The Europeans are getting in on the act to help recapitalize their financial industry.
The U.S. Treasury is planning on recapitalizing banks through direct stock purchases - which hands out tax payers' money in return for part-taxpayer ownership in banks.

30-year mortgage rates have inched higher to 6.16 percent this morning according to Bankrate.com. It had been 5.9 percent last week.
The 10-year Treasury yields have bounced up from rock-bottom rates of 3.5 percent early last week to nearly 3.9 percent today. The 40 basis point jump has pushed up mortgage rates.
The Federal Reserve interest rate cut last week directly impacts the short-term rates, but does not directly impact long-term rates. Part of the increase in long rates could be due to inflationary expectations which may not be decelerating as fast.
Mortgage rates are still very favorable from a historical perspective.

Stock markets may have been oversold. Any positive gains, if sustained, will help mitigate economic downturn.
Mortgage rates are no longer at rock-bottom rates, but still favorable. Day-to-day swings are impossible to anticipate, but the long-term trend will be an inching up in rates independent of the Federal Reserve monetary policy.

This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >

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