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How will the global markets effect the U.S.economy?


The international markets are now following the broad based U.S. slowdown, what does this mean for mortgage rates and our economy?

There has already been a great deal of coverage on the U.S. economy, but fears of a world wide global recession are now gathering momentum. Major international markets have lost between 5-10% since the beginning of the year. The major catalyst for the large drop is the term "write down", banks through out the world are now in a process of writing down their assets as they believe that value of ther assets, especially those tied into mortgage backed securities are significantly less than they originally estimated. This has already resulted in over 100 billion dollars of losses for U.S. banks and financial institutions and there is speculation that the banks will need to write of between 50 and 150 billion more over the next 12 to 18 months. Leading markets such as the European and Asian stock market have seen a drop of over 5% in a matter of days. We anticipate their will be a major collaborative effort by the worlds banking institutions to infuse cash into the marketplace and the U.S. federal reserve to agressively lower the fed funds rate, but the questions remain if this will be enough to stabalize the markets. Look for fixed mortgage rates to continue to trend down on the bad news.


1-21-2008 ? LoanNetwork.com





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