Will Rates Drop Next Week?

•· Beginning January people 62 and older will be able to use a FHA Reverse Mortgage to buy a home. Yeah! A reverse mortgage requires no monthly payment, no income or employment information is needed or verified, bad credit is no concern either. They are very easy loans to get approved and closed. But, you must 62 years old and be putting a large amount of money down and will plan on living in the house.

Financial News Update

•· 3^rd quarter GDP shrank by .3% which is a smaller drop than expected. Consumer spending within the report had its biggest drop since 1980 with a drop of 3.1%, which lowered the GDP number by 2.25% as consumer spending makes up 70% of our economy.

•· For September personal income grew by .2%.

•· For September personal spending dropped .3%. What this means is that people are saving more. Imagine that!

•· The Core PCE, the Fed's favorite inflation gauge, rose just .2% last month is now up only 2.4% in the last 12 months.

•· Commercial paper sales rose 6.9% this week for first time in 7 weeks. Yeah! This is great news and hopefully a sign of the credit markets thawing out.

Mortgage rates continue to remain sticky at higher levels at 6.50%. The Stoachistic Indicators for mortgage bonds tell me that mortgage bonds are becoming over-sold. Plus, mortgage bonds have formed a strong floor of support. What does this mean in English? I think mortgage rates should drop next week; however recent history tells us that mortgage rates won't drop below 5.875%.