Lending Landscape - January 31, 2008

Mortgage rates bumped up slightly this week ahead of the Federal Reserve Board's interest rate decision. Improvements in the stock market sent prices of the benchmark 10 year bond lower which subsequently pushed 30 year rates higher.

The government-sponsored loan buyer said the rate on a 30-year fixed-rate loan averaged 5.68% for the week ending Thursday, up from 5.48% last week, but still well below its historical average Freddie Mac noted.

At this time last year, the 30-year fixed-rate mortgage averaged 6.34%, Freddie Mac said.

Financial markets have been quite volatile this month, but mortgage rates appear to be leveling off. Short term mortgage rates are trending down under Fed guidance. More importantly, the Fed is bringing confidence to the housing market.

TV personality Jim Cramer wrote -

Cramer was -- to put it mildly -- vocal about his displeasure with the Fed's lack of response to the credit and housing woes that have gripped the markets since last summer. But now he's so confident in the economy he's considering buying what might be "the most loathed and toxic investment around": a house. The additional cut, which came just a week after another 75 basis-point emergency cut, has made a turnaround in housing "inevitable," he said.

Utah has been slow to feel the pain of the housing crisis, but the underlying problems in the mortgage industry affect every state. Lower rates and a slowing housing market in Utah have created opportunities for financing and builder discounts/incentives on new homes.