Rates are lower this week! News Tuesday from Fannie
Mae of losses brought concerns and lower indexes initially
on Wall Street… however this news was offset by
a positive development. Regulators responded to this,
plus related news that Fannie would bring in $6 billion in
new capital to offset the losses, and responded by lowering
Fannie’s surplus capital requirements (reserves). This
caused Fannie’s stock to bounce back from it’s low earlier
today and gain ground by 8.9%, welcome news to shareholders.
But the best part of all this is that it’s likely to
increase Fannie’s strength and ability to help the housing
market to recover. Lowered reserves means that Fannie
can make more loans… good news for us all.

“We don’t expect a recession in the U.S.” and the financial
crisis stemming from the collapse of the U.S. subprime
market may be nearing an end, said Deutsche Bank AG
Chief Executive Officer Josef Ackermann in Frankfurt
today. Conversely, Harvard University economist Martin
Feldstein, a high ranking republican economist, said the
U.S. economy is “sliding into a recession.” Who will be
right? This will depend on whether lenders heed the advice
of our Fed Chairman. Ben Bernanke spoke with banks
and mortgage lenders yesterday and echoed his recent
statements, urging them to work harder to reduce foreclosures.
Will they listen? It seems that banks and lenders
continue to turn a deaf ear to pleas for sane restructuring
of homeowner debt and continue to focus protecting their
bottom line and investor profits. Perhaps the federal government
will have to step in and impose stronger regulation
of the banking industry.

What does this mean for you? If you have credit card debt
this is a fine time to pay it off (if you can) to avoid interest
rate increases. Creditors are trying to turn a profit by raising
rates without warning. HELOCs are also being frozen
without warning, so if you think you may need cash in the
near future my advice is to borrow now and stash the cash
in an interest earning investment to offset the loan interest
until you need the money. Increased buyer interest at
open houses recently seems to indicate that more folks
are getting ready to snatch up great deals on properties.
We’re also hearing that some analysts believe we’re at the
bottom of the market cycle right now. If the current trends
continue there’ll be more positive news next week.