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 Mortgage Rate News
Mortgage Interest rates fell slightly during the month of
November, falling approximately one-eighth of a percent.
Analysis
Expectations of economic performance in the future and how
that performance will impact inflation is what drives interest
rates up and down. As usual, it is difficult to predict
future economic performance because things are much more
complex than they used to be.
Over the last year, incomes increased
faster than inflation. That's the first time that has happened
in the last three years. At a 4% growth rate, this is the
fastest that incomes have grown in nine years.
 There haven't been any big hurricanes.
Although the recent inflation news
looks good, no clear trends are yet visible -- so it is unlikely
that the Fed will start cutting short-term rates. That's
actually good news for fixed mortgage rates because it means
future inflation is less likely.
The election?
If there was a common theme among
the Democrat Party's campaign issues (besides Iraq), it was
an emphasis on fiscal responsibility. In short, the Republicans
have been spending so much money that they look just like
Democrats (according to the Republican description of Democrats).
As a result, the new Congress may want to prove they want
to cut spending and that looks good for business.
However, if the new Congress raises
taxes (or removes tax cuts) just when the economy might be
slowing down, that could create problems for future growth.
And that helps keep interest rates
low.
Interest Rate Future
For the next two months, unless there is a surprise, there
does not appear to be any economic force that will drive
mortgage interest rates upward. Things should be steady
with slight fluctuations due to uncertainty.
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