Atlanta Mortgage Rate Trend for the week 01/26/2006

Rates on the 30 year benchmark mortgage rose for the sixth week out of the last seven.  The rate was up  6 basis points to 6.32% this past week.  A year ago the rate sat at 6.17% and it is up from 6.23% over the past four weeks.   Overall, rates are up about 0.25% since their bottom in early December due to a run of good economic news.  This good news has lead investors to fear that the Fed is going to possibly change their stance when they meet later this week.

Investors have their hopes pinned on a Fed rate cut at some point during 2007.  Many had hoped for a cut in the first half of the year, however, the recent run of good news has led experts to put nearly a 0 percent chance of this happening in the first half.  In the absence of any bad news on the economy, mortgage rates will likely stay in a trading range from 6 1/4% to probably 6 1/2% over the next few weeks.

For all of 2006, sales of existing homes were down 8.4% which was the largest annual decline since 1989.  New home sales ended with two strong months in November and December.  The consensus view on housing seems to be that we have reached the bottom and we will have a slow and gradual improvement during 2007.