6.16% and 0.7 points - 30-year fixed-rate mortgage, average in Western U.S. for week ending November 23, 2006. Blue line is Freddie Mac forecast made 11/02/2006.
“Housing starts in October were down more than expected, which the market saw as an indication housing would be a bigger drag on the economy than had previously been thought,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Slower growth usually means less inflation and less inflation means lower interest rates. Hence, the drop in mortgage rates this week.”
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John M. 11.24.06 at 10:11 am
GSE chief economist forecasts can be a lot of fun. Don’t miss the graphs in my recent post Bernson’s Rebounds, where Fannie’s Chief Econ weighs in with happy news of gravity defying rebounds next spring. Frank Local! Local! Local! Northaft is probably right about rates staying down for a while, but it won’t matter much if prices keep falling.