Economist's Commentary: September 8, 2008
Quick Take on the Economy: September 8, 2008
By Lawrence Yun, NAR Chief Economist
Fed Takeover of Fannie and Freddie
- The federal backstop assures a better flow of mortgages to the marketplace at least for the next 12 to 18 months.
- Homeowners win. Fannie and Freddie stockholders will get slammed. Fannie and Freddie debt holders will do fine.
- Read more on the takeover.
Consumer Credit
- Consumer credit increased by only 2.1 percent in July. This is very soft , implying consumer spending growth could also be soft in upcoming months.
- Consumers are stretched financially, and appear unwilling to borrow. But this holds back inflationary pressures. The Fed can delay its monetary policy move till spring of 2009.
What does today's data mean for REALTORS® and consumers?
- Homebuyers on the sideline should be checking for new mortgage rate quotes and lock in once they become favorable.
- Economic growth could slow.
Daily Forecast Update
- NAR's monthly official forecast as of August 7 (15K PDF)
- GDP Q3: 1.7%
- GDP Q4: 0.7%
- Unemployment rate by election time: 6.2%
- Average 30-year fixed mortgage rate in December: 6.5%
- Average 30-year fixed mortgage rate by mid-2009: 6.8%
- The next Fed policy change: a rate hike in March 2008.
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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