Economist forcasts Rate Cuts

Sorry I meant leading forecaster for 2006

Please do not confuse Short Term rates with Long Term rates. The FED does not directly control long-term rates, which is what really matters when it comes to mortgage rates.

The Fed can cut short-term rates till kingdom come, and still have what would essentially be the reverse of Greenspan's 'conundrum', where appetite for long-term treasuries continues to decline.

So, even if the aforementioned economist is correct, the result with respect to mortgage rates has no direct correlation.

I believe that interest rates will also drop. I am not buying that the US economy is growing at such a fast pace. In fact this little spike up of rates will have a dampening effect on growth. Keep in mind that the housing market is a very large component of the US economy and creates many jobs directly and indirectly. Any major slow down in the housing market will have a dramatic effect on the growth of our economy. Since the housing market across the US is slow why in world would one think that the the US economy is on fire and therefore the FED needs to jump in an increase rates. I also believe the unemployment rate will steadily rise this year due to the slowdown in the housing industry. Watch for mortgage rates to start declining over the next several months as a result.

I agree with the above post. I don't see how in world interest rates would continue to go up in the US. As far as I'm concerned our economy is not in such great shape and with the continuation of housing slowdown outside of NYC I wouldn't be surprised to see the Fed to cut rates by year end.

just what the ny re market needs. more cheap money.

Sorry the Fed's not going to do anything to prop up the RE asset bubble. It's going to hold steady thru 2008. Anyway listen to #3 - Fed has no control over long term rates - the market dictates the rates, and the global long term trend is that rates are going up.

I guess we will have to wait and see but I don't see rates going any higher from here. Contrary to all this propaganda on how on fire the global economy is here at home the economy is nothing to write home about. The foreclosure rate is at all time highs and the sub prime market is about to get even worse so why in world would the Fed not want to think about cutting rates.
Time will tell but I see the market if not the fed bring down the rates from here.

I know several owners of business in various fields and all tell me things are slow now. So yes I agree there is a lot of propaganda about how great the economy is. I too think this current rise in interest rates is going to be very short lived.

#8 - repeat after me, the Fed does NOT directly control long term rates which most mortages correlate to.

Many little black arrows going down...

http://www.nytimes.com/2007/06/15/business/15bond.html?_r=1&hp=&adxnnl=1&oref=slogin&adxnnlx=1181880051-cV2w77jukVoCZi+7AuDLEw

# 10 Repeat after me if the economy in the US is not on fire than the 10 yr will come back down and so will mortgage rates. Repeat after me the economy in the US is not on fire we are not in a boom economic period thus the market not the fed will bring down interest rates initially. The fed wil then follow the market and eventually cut interest rates.

Looking at the yield today at the 10 yr. It's falling rather nicely expect mortgage rates to drop as well over the next several weeks.

I think this guy Noah Resenblatt who is predicting higher rates and a decline in Manhattan real estate is a real estate broker and prior to that was a day trader.

#10 Many little red arrows going up for you bitter renters...

Nice drop in the 10 year note today. Looks like interest rates are starting to fall once again.
Expect more up and down in the interest rate market till years end with an emphasis on declining rates come December.

http://www.bloomberg.com/apps/news?pid=20601087&sid=arhazjYdU1po&refer=home

China has been keeping long term rates down artifically for a long time now. They are starting to unwind this, so the long term outlook for rates is going higher. Sorry to all the insecure buyers who need to leverage themselves to the max so they can afford the small little apts.

# 16 you are a renter and an idiot at the same time. I own several apts in NYC all at fixed rates and I do believe rates will come down from here. BTW China doesn't control the US economy. However, since you can't think for yourself and continue to quote news articles that confirm your microthoughts keep wishing and keep renting.

#3 said that long-term rates and short-terms rates are two different animals. They may be but they move together like Olympic synchronous swimmers. They are two of the most correlated variables this side of Statistics.

Anyone who thinks the Fed is going to reduce rates anytime soon is insane - the dollar is way too weak to make that kind of move.

#18 - haha, you must have been living under a rock for the last 3 years. Don't you know that during the time the Fed jacked up the Fed funds rate from 1% to the current 5.25% that long term interest rates have actually declined (up until the recent movement during the last month or so)??

I trade mortgage backed securities, so I know a thing or two about interest rates. But it's clear that most of the people on this thread don't.
Why are any of you debating interest rates here? Even really really smart traders can't guarantee what interest rates will be at the end of the year. Hell, not even Ben Bernake *knows* for certain where rates will be beyond the next Fed meeting. There's just too many unknowns.
So why are you people, most of whom (no offense) clearly have almost zero background in economics, trying to debate the future of interest rates as if you know what you're talking about?

Rates may go up or down. Housing prices will probably go up or down with them. That's all you can say. Move along now, this thread is over.

# 21 things such as interest rates, housing prices stocks, rental market are all impossible to predict. Yet the whole forum not just this one is about peoples opinion. All trading mortgage back securities makes you is an expert on taking orders to buy and sell. Nothing more nothing less so you of all people should have no comment since a monkey can do what you do for a living.

#21 - I have to disagree. When the stock market crashed from the dot com boom + the after effects of 9/11, the fed quickly moved to stimulate the economy via an ultra low monetary policy. It was clear that real estate would eventually become a great investment as cheap money would enhance affordability and this fundamental would occur at a lag AFTER policy trickled down the economic system.

For those that need shorter term guides, the 10YR bond yield, if followed and understood correctly, will help predict where lending rates are headed. Now, question is do you understand what affects these bond yields? Sure there are uncertainties as to how the bond markets will react to certain datasets and/or trends, it was clear in mid May that the yields were making higher highs and higher lows. On May 17th, when the jobs data was surprisingly strong, it was clear taht the US economy was stronger than bears thought and yields jumped again. That was your SIGN to lock in your rate! Too much downside risk not too.

I agree that in times like this where there is NO major catalyst as to where our economy will be in a year or two, its hard to predict where rates are headed so far down the road. But rest assured, if global economies continue to surge and US economy and stocks continue to remain strong, rates WILL trend higher. And if something unexpected happens to skew the trend in either direction, like say another terrorist act or a global meltdown, then expect our fed to re-stimulate our economy and cushion the downside by aggressively lowering rates and lending rates will follow. But that hasnt happened. And if that does happen, we are likely to see a horrible economy for a period of time as a result; which is why the fed will lower rates anyway.

I know many friends with great job positions that don't even understand how inflation affects global rates. They are just good at learning their specific job that they got from knowing someone in the company. And they make tons of money.

#23 -- correct me if I'm wrong, but did your 3rd paragraph basically boil down to "if the economy surges then rates will trend higher; but if the economy slows then rates will fall"?

Uh, yes, I suppose that is true. Point being?

There are a lot of people on this forum who have not even mentioned that rates are still very low. The question is where is safe money today. If the treasury is safe, people will buy treasuries and prices will go down. If people are investing overseas or in other asset classes, people will sell treasuries and the prices will go up. The low rates everyone is used to will probably not happen again for a while. The fact is, that lending standards are changing and it is harder to get a loan for B credit applications. This hurts rates. Banks are looking for more money down which most people cannot afford. You cannot time the market. You can only do what is right for you today. My opinion is that we will probably stay within a tight range of about 1% and we are getting close to the higher side. 10Y could get close to 6% and historically will still be low. The spread between the stock market and bonds are wide now, so people are still investing is stocks. The second stocks start falling you will see yields come lower.

#24 - Did you NOT read the paragraphs before that? Cmon now! Or are you just trying to find a fault in that response? I was responding to #21 who said "Rates may go up or down. Housing prices will probably go up or down with them. That's all you can say"...

I think you can dig a bit deeper than just, 'hey, either its going to go up or its going to go down; no on really knows.'

Agreed with #25 said! Rates are historically low and a 5.25% fed funds rate is NOT restrictive! Recall, 6 months ago EVERYONE was predicting 2-4 rate cuts starting in early 2007! But I was discussing why rates would rise. Now, everyone forgets where they came from and probably because they don't understand what affects rates in the first place.

Gee rates are dropping once again. I believe the spike up was a distortion cause by a few big players unloading their positions. On a pure technical basis looks like the trend in rates will continue to drop after testing it's high from last week. I am forecasting that the 10 yr drops below 5% by the end of next week. Look for mortgage rates to drop accordingly.

Holy cow looks like the 10 yr may go below 5% by the end of this week.

I don't get it. Everyone and I mean everyone and there mother was forecasting interest rates were going to continue to go up and soon the 10 yr would be well into the 6% category. This in turn everyone was saying was going to have a major impact of the Manhattan real estate market. Well guess what rates have back down and now more and more economists are forecasting the 10 yr will be down below 5% and possibly reach new lows in interest rates by year end. Go figure it appears everyone just likes to get on the bandwagon.

Rates jumped again today - long term trend is continuing higher.

"Well guess what rates have back down and now more and more economists are forecasting the 10 yr will be down below 5% and possibly reach new lows in interest rates by year end. Go figure it appears everyone just likes to get on the bandwagon."

Interesting how within 10 hours of your post, rates jumped right back up and the market tanked more than 150 points again. Nice timing. LOL!!!

"Well guess what rates have back down and now more and more economists are forecasting the 10 yr will be down below 5% and possibly reach new lows in interest rates by year end. Go figure it appears everyone just likes to get on the bandwagon."

Interesting how within 10 hours of your post, rates jumped right back up and the market tanked more than 150 points again. Nice timing. LOL!!!

Still rates well off their highs. Trend still appears to be heading down and would be surprised if they are below 5 % by next week

SI meant wouldn't be surprised if they dropped below 5 % by next week

"Bloodbath"

http://www.bloomberg.com/apps/news?pid=20601109&sid=adDRCBB5fqZQ&refer=home

# 35 Very interesting and informative article. In a nutshell I believe what they are saying if interest rates go any higher than they are now it will potentially drive the US economy in a recession. The brakes on the interest rates will also be rising oil and slumping houses prices throughout the nation. How NYC will fair is open to debate but one thing for sure once the housing market recovers nationwide which will happen one of these years NYC prices will a lot higher. In fact today NYC apt prices will look like a fire sale compared to the year when the the housing slump nationwide recovers.

Spreads continue to widen..

http://www.bloomberg.com/apps/news?pid=20601087&sid=a5fqKctzpfYY&refer=home