Mortgage Outlook and News - May 2002

As the stock market goes, so goes the bond market and mortgage interest rates. As we've seen lately, the stock market is going exactly nowhere as investors remain extremely wary of the future outlook due to:
1. Lower than expected corporate earnings for the first quarter.
2. Accounting worries and the general distrust of Wall Street's
credibility.
3. Diminishing expectations that the economic recovery will robust - (it looks weaker with every new report).
4. The chaos in the Middle East and the ramifications of the conflict on energy prices.
5. The present psychology of investors to sell on strength - (to get their money back when a stock recovers back to what they paid for it) rather than buy on weakness.

All this is good news for mortgage interest rates. Fixed rate 30 year, loans are in a range right now of 6 ½ to 7 ¼%, which is great. They are likely to stay in a tight trading range through May. As long as the stock market stays in a slump, it is unlikely that interest rates will move significantly higher. Investors have way too many concerns to pull money out of the bond market and go on a stock buying binge anytime soon.

May 2002 is an exceptional time to take advantage of the lowest interest rates in the last 20-30 years.