According to Freddie Mac, due to a weakening economy mortgage rates are down for the third straight week. Jobless claims are at record highs, the home construction market is in a severe downturn, consumer sentiment is at a record negative number that we haven’t seen for the last 28 years, and retail sales are weak and expected to be weak throughout the holiday season.

30 year fixed mortgage rates were down to 6.04%. A year ago a 30 year fixed rate mortgage was running 6.2%.

The Fed dropped rates a few weeks back, and today Bernanke opened the door yet again for further rate reductions. As previously mentioned, mortgage rates don’t necessarily track the fed funds rate, but rather act uniquely and in many cases are more closely correlated with the 10 year treasury.

With mortgage rates down nationally, mortgage applications are on the rise! This is a good sign for the broader US economy. We need stabilization of the real estate markets first and foremost.

Here in Las Vegas, home inventories were well over a 20 month supply a year ago – it was reported this week that there’s roughly a 9 month inventory on the market now. This is a great sign for one of THE SINGLE MOST depressed real estate markets in the country!

A 30 year fixed mortgage last week was roughly 6.24%, down about .23% from the prior week. This spurred the increase in mortgage loan applications.

We’re still a year into a bear market and suffering through one of the most devastating economies in years. It’s still a perfect storm of:

1. real estate prices depressed
2. institutional “de-leveraging” of their loan portfolios and business structure
3. foreclosures still rampant
4. mortgage rate spreads widening increasing rates (though this has reversed recently to some extent)
5. unemployment the highest it’s been since the 9/11 era
6. equity capital markets acting completely irrational and volatility at extreme levels
7. oil prices soaring, then subsequently falling
8. the dollar getting crushed, then recently recovering somewhat
9. the prospect of higher tax rates on capital gains, the wealthy, and small business
10. FEAR, FEAR, FEAR – 70% of the economy is directly related to consumer spending and the American population has no confidence, with statistical confidence levels at a 40 year low.

Mortgage loans being made now are good loans however – it’s nearly impossible to get a loan without a substantial down payment or equity in the collateral property. It’s also nearly impossible to get a home loan with poor credit, and forget about “stated income”!

The foreclosures will work their way through the system, as will the deleveraging process. Eventually home inventory will shrink, forcing real estate stabilization.

There are some bright sides to the economy and I choose not to be downtrodden with all of the negativity in the news. America is a resilient nation – we will bounce back, and likely stronger than ever!