Industry NewsMortgage

Legends and tales taking blame for housing downturn

Mortgage market commentary

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The 10-year T-note fell this week all the way to 5.05 percent from its 5.26 percent top two weeks ago. Long-term mortgage rates have settled today near 6.75 percent. The interest rate decline has had several contributors. In approximate order of importance: fear of default on widening classes of ill-advised debt has pushed money to high-quality paper; a "retracement" from the crest of a big move is normal; and gradually improving inflation data are tilting the Fed from a tight stance toward balanced. Lastly, regarding an accelerating U.S. economy: wait a minute fellas. Home sales are still falling, and unsold inventories are up to 8.9 months' supply, a 15-year record. Weakness in both consumer confidence and orders for durable goods put the second half of 2007 in question for anything much beyond 2 percent GDP growth. Everyone is trying to form a housing forecast: how long, how deep, how bad will the collateral damage be? That is, everyone except for those who participated in the Great...