I am so disgusted right now over the stock market, the mortgage industry and interest rates. I stand firm that this is all media hype and market moving for those savvy wall street types.Most of all I am so sad for the good strong borrowers out there.

     As the stock market goes down and the price of oil goes up, the 10-year bond yield goes down.As stated in my previous blog entries, on a simple level as the bond yields go down interest rates go down.Not inch by inch, step by step……… but they dogo down. Not really and not now.

     WHY!!!!!I am so mad.The reason why is that the banks have taken such terrible hits because of the credit market and sub prime loans that they cannot afford to lower the interest rates to consumers on loans and mortgages.They have lost so much money (with more losses to come) that they need to keep the spread as wide and as long as possible. Therefore, as money costs the banks less to borrow, they try to keep the interest rates as high as they can to the consumer.

     An average 30-year fixed rate can peek at 6%, which I think is great.However, the rates should really be lower.I would hope when things quiet down and the market begins to see some sun, the rates will go below 6% and stay that way for some time.I would predict to say that rates would go even lower than the lowest we have seen in the past 2 years.The problem is that, people are so shell shocked in the real estate market that nobody wants to do anything. Another problem is that more and more lenders are pulling out of the market so there are fewer lenders to use.

     This event can be considered a normal weeding out process.What it feels like is the Titanic with wide and strong negative affects.Soon, we will all forget.I hope again soon, my clients will be talking about the great mortgage they got and the lowest interest rates ever!

Until then, I must tell you to hold on!

– Dale Siegel