San Diego Mortgage Rates Report: September 17, 2007

San Diego mortgage rates may rise when the Fed comes out of the Open Market Committee meeting, tomorrow. Lock-in all loans at application. Most pundits believe the Fed will cut rates .5% while a smaller number are looking for a .25% rate cut.  (I am in that smaller number).  Here's why:

Bernanke recognizes that the economy is slowing.  He also recognizes that there is upwards pressure on prices from basic  commodities- oil, housing materials, and food.  That's called cost-push inflation.  Cost-push inflation, simultaneously existing with a declining gross domestic product, is the definition of stagflation.  Stagflation is the absolute worst of both worlds;  a recession with accelerating prices.

Stagflation is what gentle Ben is concerned about.  While the Wall Street traders believe he'll aggressively cut rates to save the economy, I think he's concerned about the potentially devastating effect of stagflation.  He'll tale some short-term heat for not cutting rates quickly but he'll make the right long-term decision by showing temperance.

That means that San Diego mortgage rates could rise tomorrow.   Again, it's all about the risk.  We strongly suggest that San Diego home buyers lock-in interest rates at application.