Economist's Commentary: May 7, 2008

Quick Take on the Economy: May 7, 2008

By Lawrence Yun, NAR Chief Economist

Mortgage applications for home purchases bounced back with a 12 percent increase in the latest week. The index is still down by 13 percent from a year ago.
Refinance applications also jumped nicely by 19 percent over the week after two straight weeks of notable declines. This index is 7 percent higher from a year ago.

Fannie Mae announced this morning that it will purchase conforming jumbo loans for its portfolio at the same pricing as non-jumbo loans.
This will measurable reduce interest rates on jumbo loans very soon.

Broadly speaking, anticipate a better economy, home sales, and home prices in the second half of the year.
Large local variations exist. Talk to local professionals to get proper local assessment.
Mortgage rates on jumbo loans will fall notably to the tune of one full percentage point. That means about 6.3 percent average rate rather than the current 7.3 percent.
Consumers needing a jumbo loan could save about $3,000 in annual interest cost.

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