AgentIndustry News

Fed rate cut likely next week

Commentary: Credit crunch's effect on housing could intensify

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The credit panic appeared to stabilize on Wednesday, interest rates rising a bit, but the crunch found new legs today on news of sinking retail sales. At week's end conforming mortgages are a hair under 6.5 percent, the gap to vanilla jumbos closing to roughly a 0.5 percent premium, half of the worst in August. Everything else -- even high-quality off-brand loans -- is as-was: pricey or gone. The Fed meets Tuesday, will cut its overnight rate a bit, will have something murky and inane to say about following developments as they develop and taking appropriate action when appropriate -- all completely as expected by the markets and built into the current rate structure. The next big move in long-term rates will depend on economic data weeks away: We won't get trend confirmation of last Friday's weak employment data until the next report on Oct. 5. Thursday's report of no change in early September unemployment claims says that hiring may have slowed, but we're not yet facing a spike in la...