Nashville Real Estate Forum

Weekend Market Update

Nov. 1-2, 2008

Stocks stabilized in a week in which the Fed cut its Fed funds rate by a half point and GDP numbers showed the U.S. economy is officially shrinking. For the first time since third quarter 2001, GDP dropped, showing a 0.3 percent decline from the prior quarter. Given the recent declines in consumer confidence and employment, there is likely to be further contraction in the fourth quarter and into 2009.

After extreme volatility and massive washout selling earlier in October, the stock market seems to have priced in the future bad news it expects about the economy and continues to lift off its bottoming pattern, which we called in the Oct. 11-12 Weekend Market Update. As money moved into stocks, it flowed out of Treasuries and mortgage-backed securities, sending yields and mortgage rates slightly higher.

The 10-year Treasury closed at a yield of 3.97%. The Fed funds rate is now at a record low of 1%, last seen in the June 2003-July 2004 period. The prime rate is now at 4%, or Fed funds rate plus a margin of 3%.

Look for mortgage rates to pull back a bit lower in the short term after this week's mostly upward pressure. In the long term, mortgage rates are still subject to inflation expectations and the government's costs of borrowing to pay off massive debt. At some point we can expect that the Treasury will have to increase its yields to entice foreign investors to buy our paper.

30-Year Conventional Fixed

6.25% $200,000-$432,500

FHA-VA

6.5 % $100,000-$432,500

103% 30-Year Fixed

6.75% (first mortgage w/1% discount) $100,000-$432,500

8.75% fixed 20-year second mortgage

100% Guaranteed Rural Housing w/no MI

7.25% $100,000-$432,500

30-Year Conventional w/Financed MI

6.75% $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

"History is a vast early warning system." - Norman Cousins

Visit my mortgage website: http://www.BrentwoodHomeLoan.com

(0% points, 1% origination, 30-day lock. Market Update informs on market trends and is not a quote for a unique borrower. Reply to discontinue Update.)