Marc's Mortgage Matter's

Welcome to Women's History Month! National Women's History Month dates back to 1857, when women from New York City factories staged a protest over working conditions. International Women's Day was first observed in 1909, it was made into a week in 1981, and then in 1987 it was made into an entire month. Given that trend it will soon be the entire year. (When is National Man's History Month?) Per the Census Bureau there are 157 million females in the United States, versus 153 million men. (Please don't ask me where Chas/Chastity Bono fits in.) Over the age of 85, there are more than twice as many women as there were men. Census 

Values are going up! Well, at least farmland values - they have doubled, on average, in the last 10 years! Let's talk about it - and why not, given all the thousands of banks that lend on farm land. The FDIC will host a half-day symposium to discuss farmland value issues, titled "Don't Bet the Farm: Assessing the Boom in U.S. Farmland Prices," on March 10th in Virginia. The worry is, of course, about a farmland bubble.

Hispanic, Asian and African-American real estate leaders are in Washington DC this week for the 2011 Multicultural Real Estate & Policy Conference, and will distribute a joint plan for preserving minority homeownership to elected officials during member visits to Capitol Hill. The plan calls for more diverse and innovative solutions needed to meet the housing challenges facing multicultural communities now and in the future. Check it out! An economy gaining momentum and a world economy producing price strains may ultimately drive interest rates higher, but as long as political unrest and the future economic drag of rising oil and gasoline costs remain in play, they remain tomorrow's problem.

The Fed's economic tonic -- low interest rates and plenty of liquidity -- does seem to be having the long-awaited desired effect of boosting growth to more self-sustaining levels. As Spring fast approaches, so does hope for a recovery expanding in breadth and depth. How long these policies can be maintained without fueling inflation remains to be seen, but the Fed maintains that they will be able to effectively deal with it when it returns. Fed Chairman Bernanke said as much in his testimony before Congress this week: "We have all the tools we need to achieve a smooth and effective exit at the appropriate time."

Whether markets will feel that way or not remains to be seen, and interest rates will surely rise even as the Fed employs its measures.

The markets seem to have taken to heart Mr. Bernanke's promises of a benign Fed policy for some time into the future, and might even be said to be expressing a growing confidence in the Fed's ability to manage the inflation it is and hopes to foster. At least for the month, it also seems to us that the market is expecting that the effect of expensive oil offsets the increase in incomes, keeping the economy on a slow-growth path for a longer period of time.

This may be the case, but the Fed's record of managing inflation problems when they do come is spotty at best, and the effect of more expensive oil may not overwhelm the positive effects of more people getting back to work. Certainly, these items should be given the benefit of the doubt, for at least a while. However, we believe that higher interest rates are a far more likely occurrence as we look toward spring than are lower ones, and borrowers in the markets need to be wary of a potential for a flare in interest rates as we move forward. It is worth noting the recent experience of rates rising from 4.32% to above 5% in just about two month's time last fall and early winter.

The drift downward in interest rates over the last few weeks, a cumulative move of better than an eighth percentage point on average, represents and opportunity for those in process to grab a slightly lower interest rate, and perhaps a reason for some potential homebuyers to step into the market ahead of the Spring homebuying season. There is a lighter economic calendar next week, but we'll see some important reports on Consumer Credit, Retail Sales, Inventories and trade to move the markets around. If the nudge higher in underlying interest rates at week's end was any indication, the decline in rates may halt next week, and we might take back this week's small dip.