This past week ending October 18th, saw a slight increase in Mortgage Interest rates. Why the increase and what is our forecast for the weeks ahead.

1) There has been an increase in 30 year conforming rate to 6.125% with zero points.
2) The underlying 30 year and 10 year notes both rose this past week.
3) At the end of the week the concerted government action led to freeing of capital across borders

We believe that the Federal Reserve will reduce the Fed Funds rate at their next meeting and that the further introduction of new money into the system (through TARP and other programs globally) will lead to a decrease in rates. When the fiscal stimulus effect of these actions take hold banks will be increasingly under pressure to loan the money at lower rates.

It is our belief that this interest rate reduction will provide an opportune time to re-finance or enter into a new mortage.