Frank Nothaft Market Quotations

There is a slight chance the Federal Reserve Board will raise rates when it meets later this month, but with the current labor market and slowing consumer spending, it is more likely that it will take no action until August at the earliest. As a result, short-term interest rates, such as the one-year adjustable-rate mortgage, drifted further down this week.

The Producer Price Index for April, released today, showed a considerably larger decline than had been expected, reaffirming market concerns about the state of the economy. However, the Consumer Price Index for April that will come out tomorrow will give us a much more comprehensive picture of what is actually happening.

Low rates combined with the up-tick in consumer confidence are strong indications that the housing market will continue to prosper into the summer months,

With mortgage rates low and consumer confidence high, Freddie Mac economists expect the housing market to remain strong in the months ahead.

With the unemployment rate at a low of 4.3 percent and mortgage rates remaining at present affordable levels, we expect the housing market to continue to be strong into the coming months.

As the economy continues to show signs that the recession is ending, the housing market continues to expand thanks, in large part, to current low mortgage rates. And as long as inflation is not an issue in the economy, lending rates should remain around 7 percent.

Currently the market is focusing on an anticipated economic recovery within the next six months. That focus put some upward pressure on mortgage rates this week, causing them to rise. There remains good volatility though, due to market speculation over exactly when and how strong the rebound will be.

That said, January housing starts were the highest in over 20 years, and that is based on higher rates than we are currently experiencing, ... All in all, the little run-up in rates that occurred this week will not be enough to cause a significant slowdown in current housing market activity.

The escalating tensions within the U.N. over the impending resolution on Iraq and dismal economic news this week sent the stock market tumbling and with it went bond and mortgage rates. The high volatility is likely to remain for a while. But since there are no upward pressures at the moment, any sustained rise in rates in highly unlikely.