Good economic news all week long had mortgage rates headed for an up-side blowout until rescued by today's word of zero change in November's Consumer Price Index. Do not be misled: for long-term mortgage rates to hold near 6 percent -- let alone decline further -- the economy has to sink, and that is not what it is doing. The killer this week was retail sales, up a solid 1 percent in November, and October revised up. Then came word of falling applications for unemployment insurance and a surge in applications for new purchase mortgages -- the first real gain in a year, up 15 percent in just three weeks in a usually quiet season. The basis for belief in a substantial economic downturn, Fed easing, and justification for a 4.5 percent 10-year Treasury and six-flat mortgages has been housing's implosion. Overall, the housing market is still some distance from hitting bottom (house prices may begin to stabilize, but loan defaults and foreclosures will rise for a year or more, and resumed ...
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