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 July 09, 2007

Housing Market has Economists at Odds
Some economists expect the economy to grow at a sturdy pace of 3.4%, while others expect only 2%. The swing factor is the state of the housing market.
The MBA (Mortgage Brokers Association) reports that interest rates climbed from 6.1% in early May to 6.6% by the end of June. Some economists say that this could result in a reduced demand for housing.

This increase effects the payment on a maximum conforming loan in the amount of $417,000 from $2,527 per month to $2,663. Economists point out that this increase may not be a lot for a prime borrower, but it can be the difference between qualifying and not qualifying for some applicants.

Overall, the news is not seen a overly bad. Analysts with JPMorgan Chase note that the jobless rate is lower than it was just two years ago. For example, the unemployment rate in the State of Florida has fallen below the national average. (Florida has been a poster child for the housing bust.) JPMorgan points out that unless the housing bust reaches the labor markets, consumers along with the rest of the economy will likely keep moving along.

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