OK. Time to get out the crystal ball. We've been hovering in the low 6% range with the 30-yr. fixed interest rates (despite what all of the pop-up ads on Internet proclaim) and a few bits of news lead me to believe we may hit 5% by the end of the year.
1. I see, I see. I see wheelbarrows full of money being rolled into the farmhouse of Mortgage-Back Securities (MBS). With the FED stepping in and bailing out, I mean, backing, Fannie Mae and Freddie Mac, our mortgages have become attractive again and investors are lining up to buy. Especially China. More buyers means better rates for us.
2. I see something else. I see stocks continuing to tank with bad news in the financial sector (e.g. Lehman, Merrill, the list goes on). This is good news for bonds and MBS. Rates MUST go down as a result of this higher demand for a stable investment.
3. AH! Another vision. I see a nailbiter of an election with one of the key issue being our economy. Both sides have their take on how to get us out of the housing mess, but in the interim, all of the attention on lending solutions will benefit us.
4. One more scene has appeared through the fog. I see more legislation coming out that will favor the homebuyer and encourage the purchases of foreclosed homes. With rates in the 5% range, more people can get into those homes, so we may see (and already do see with the FHA 5/1 ARM) some cheap money available to help us recover from this housing bust.
OK, maybe it's not as mysterious as gazing into a crystal ball, but in the words of The Little Drummer Boy, "Do you see what I see?"