Nashville Real Estate Forum

Weekend Market Update

May 10-11, 2008

Wall Street ended the week with a big decline as investors grappled with two of the biggest threats to the economy: fallout from turmoil in the credit market and surging energy prices. All three major indexes suffered losses for the week.

Insurer American International Group Inc. helped send the Dow Jones industrial average down about 120 points after posting a wider-than-expected first-quarter loss that rekindled anxiety about the strained state of the global financial system.

AIG reported it lost $7.81 billion -- its second straight quarterly loss -- and revealed plans to raise $12.5 billion in the coming months. The world's largest insurer, like many of its peers in the financial services sector, has seen its investments in the credit markets plunge in value.

Meanwhile, rising crude oil prices remained a source of worry for investors, as they had much of the week and in recent months. Oil futures rose above $126 a barrel for the first time, further stoking Wall Street's concerns about inflation that could curtail consumer spending. Light, sweet crude rose as high as $126.20 on the New York Mercantile Exchange before settling at a record $125.96. For the week, oil jumped nearly $10.

The economic figures arriving Friday underscored the slowdown in the U.S. economy. The Commerce Department said the U.S. trade deficit narrowed in March as demand for imports registered the biggest decline since the last recession was ending. The deficit stood at $58.2 billion, a decrease of 5.6 percent from February. The 2.9 percent drop in demand for imports was the steepest monthly decline since December 2001 -- a month after the last recession ended.

Mortgage rates remained low for the week, and the 10-year Treasury declined slightly in yield to 3.78% by Friday’s close. The analyst who provides my “Daily Rate Lock” subscription service looks for money to move from stocks to bonds in the near term, which would keep mortgage rates down.

Check out as an alternative for buyers the conforming adjustable rate, interest-only product quoted below. While the Fed has cut short-term rates, and while this has not affected 30-year fixed rates, it does affect shorter-term instruments, such as 1-year, 3-year, 5-year, and 7-year adjustables. The lower rate combined with the interest-only feature can make for a lowered monthly payment and improved cash flow.

30-Year Conventional Fixed

5.875% $200,000-$432,500

FHA-VA

6% $100,000-$432,500

Guaranteed Rural Housing w/no MI

6.25% $100,000-$432,500

7/1 ARM Interest-Only

5.5% $100,000-$432,500

Call for free pre-approval and to discover

the best financing for you!

...by Gary Moore

Cell: 615-579-8658 Toll-free fax: 866-321-6513

"I can't change the direction of the wind, but I can adjust my sails to always reach my destination."- Jimmy Dean

Visit my mortgage web site: http://BrentwoodHomeLoan.com