January 17, 2008
Now this is an interesting statistic that hasn't gotten any play, other than what I read here. If the Fed follows through on another or several interest rate cuts, we could reasonably expect mortgage rates to drop further. The lower they go, the more affordable housing becomes again. That would be an interesting scenario considering what is going on in the markets right now. However, I expect the housing market to continue to deteriorate as more and more foreclosures hit the market. Only if Congress or someone demands that adjustments be postponed or gradually raised over a number of years, can we avoid this diaster.
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Mortgage applications surged last week, with demand hitting its highest in nearly four years as interest rates plunged, an industry group said Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended Jan. 11 surged 28.4% to 906.4, its highest since the week ended April 2, 2004.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.62%, down 0.11 percentage points from the previous week, and its lowest since the week ended July 1, 2005, when they stood at 5.58%. |
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– Reuters |
We'll be paying for this in the future.
Food inflation faces more upward pressure after the US government on Friday revealed that American farmers had barely increased their sowing of cereal crops in spite of record prices.
The US agriculture department also warned of persistently low inventories, with wheat stocks at the lowest since 1947, and a massive 20 per cent reduction in corn stores.
The inventories numbers were "absolutely shocking", said Greg Wagner, an analyst at Horizon Strategies in Chicago.
"The US is going to be at the mercy of mother nature and weather conditions will be of excruciating importance this year as we really need good growing conditions," he added.
In Chicago, wheat prices for the next crop in July 2008 surged by the 30 cents daily limit to $8.06 a bushel. Corn prices hit a fresh 11-year high of $4.95 a bushel, jumping by the 20 cents daily limit. The options market, not affected by the daily limit, put prices above $5 for the first time since July 1996. Spot soyabean prices surged to an all-time high of $12.91¼ a bushel. |
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