Lending Landscape - January 3, 2008

Not much has changed on the mortgage front, except rates appear to be headed on a long, downward trend. Mortgage rates dipped after rising last week.

The average interest rate for traditional, 30-year fixed-rate mortgages fell to 6.05 percent from 6.1 percent the previous week. The average interest rate for one-year adjustable-rate mortgages declined to 6 percent from 6.03 percent.

As more uncertainty is revealed in the lending industry, the stock market has seen declines, which boost the demand for safer bonds. Because of that, bond yields decrease, in turn lowering fixed rate mortgages.

This situation improves affordability for prospective home buyers. While lending standards have tightened, FHA continues to low downpayment and expanded credit criteria for new home buyers. 2008 will be very telling for both the mortgage and real estate markets. We'll just have to wait and see.