Mortgage Rate News

When the subprime mortgage crash of last year triggered a series of events that led to the current slowing economy, many economists were united in saying that things were looking dire. Now that a year has passed, though, there are divisions appearing with regard to how much longer the economy will be in a funk, as well as what is likely to cause continuing problems in the economy.

Is the economic downturn almost over?

The subprime mortgage crash triggered a credit market crash that triggered an economic downturn (no one has officially called it a “recession” yet). Now, some economists are saying that the economic downturn is nearly over, and that, as we enter the second half of the year, things are on the road to recovery for the economy. Indeed, some say that while it will take some time to get over the recent downturn, the worst is over and that recovery is inevitable from here. Some economists believe that a nearly-full recovery may be seen by early 2009.

Or is there more economic downturn trouble ahead?

Other economists, though, are not so sanguine about recovery from the economic downturn. They point to mounting unemployment and rising prices for energy and food. Even though oil prices are down today, the overall trend is still higher, and food prices inflation continues mostly unabated. These higher prices, some economists contend, will only hinder the economy heading into the immediate future.

Here is what Mortgage New Daily reports about some economists’ outlook for the economic downturn:

While there is pressure for the Fed to combat inflation, the central bank remains constrained not only by broad-based, anemic growth, but by the fact that soaring energy prices are caused by increased global demand rather than by U.S. consumers.

Which outlook do you agree with? Is the economic downturn almost over? Or is it just beginning?

Tags: economists, economic downturn, home mortgage loan, mortgage loan blog,
mortgage, mortgage news, subprime mortgage crash

Enjoy this video of the Star Spangled Banner at the Bellagio.

Happy Independence Day!

Right now, the news is that Americans are gaining confidence in their personal finances. Spending was up in May (not surprising, since that’s when the economic stimulus payment checks started going out), and consumer confidence is showing some improvement. While I think it is too bad that we require a government handout to feel better about where we are at financially, there is no denying that it is helping stimulate some economic activity.

And in coming months, we may see even more economic activity. Over at Money Talks, this speculation has been made:

We live in an era where disposable income is king. Americans feel more urgency to pay down credit cards than to make payments on a home that is underwater. The fear of foreclosure is quickly replaced by the freedom of additional spending money. This newfound money will provide thousands of dollars a month to those consumers struggling to pay the extra $100 a month on gas. There are three things that you can always count on: death, taxes, and the resiliency of the American consumer.

We proved it last month: When we have disposable income, that is what is important to us. It’s why we work more than any other developed country (we even have less vacation time than workers in China!), and why we have more consumer goods than anyone else. We like having money — and we like spending it more.

Will this wave of foreclosures really cause us to change our idea of the American Dream? It used to be owning a home. But paying rent, in most cases, actually provides us the opportunity to have more disposable income every month. The idea of owning a home (and it can represent a huge drain on monthly income — with property taxes, mortgage payments, repairs, etc.) is becoming less attractive than it once was. And this housing market crisis is only underscoring the fact that homes can cost more than they are worth.

What do you think? Do you think that foreclosures will lead to an economic stimulus? Do you think that home ownership is becoming less desirable?

Tags: foreclosures, housing market crisis, home mortgage loan, mortgage loan blog,
disposable income, mortgage payments