The past week was chock full of news affecting the mortgage and housing markets:

• Foreclosure notices were reported to have increased by 112% over the past year
• Housing prices nationally were reported to have declined by 12.7% over the past year
• Economic growth for the first quarter of 2008 remained positive, if anemic
• The Federal Reserve cut interest rates for the seventh time in as many months

In short, a clouded economic picture continues to make this a buyer’s market for financially sound house hunters.

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Mortgage rates and housing prices run on different cycles, but they are somewhat related. However, coordination between the two cycles got somewhat out of synch over the past week:

• Mortage rates broke out of their month-long holding pattern and edged upward
• New home sales declined by 13.3% for the year ending March, 2008
• Existing home sales declined by an even faster rate for the same period

From a potential home buyer’s perspective, it has been possible to sit back over the past year and watch prices steadily get cheaper. However, the tick up in mortgage rates could signal a call to action — it might be best not to wait too long before getting a mortgage.

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In a mixed week of news, perhaps the most important outcome is that mortgage rates remained at attractive levels:

• Fed Chairman Ben Bernanke conceded there was a possibility that the economy was in recession
• A provision to give bankruptcy judges more latitude to ease mortgage terms appeared headed for defeat
• Housing sales posted a rare rise, even as prices continued to fall
• 30-year mortgage rates remained little changed for the second week in a row

As much as the above might seem a mix of good news and bad news, overall it translates to a decent environment for home and mortgage shoppers.

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While the action of the Federal Reserve to lower its rate to 2.25% grabbed the headlines, a little further behind the scenes were several positive indications for the mortgage markets:

• Regulators cleared the way for Fannie Mae and Freddie Mac to insure more mortgages
• Oil prices — a key element of inflation — took a sharp dive
• Yields on 30-year bonds fell nearly 30 basis points in one week

As much as the regulatory actions indicate a desire to ease the mortgage crisis and stimulate the economy, it is the financial market developments that could indicate a fundamental improvement in conditions on the way.

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In the latest move to both stabilize financial markets and shore up a flagging economy, Ben Bernanke and the Federal Reserve took dramatic action on March 18th, cutting interest rates by 0.75%.

This move is part of a growing patchwork quilt of government economic initiatives which have emerged since year-end. That quilt includes:

• Three separate Federal Reserve rate cuts
• A sweeping tax rebate program
• Extraordinary measures to provide liquidity to financial institutions

The maddening thing about economic policy moves is that it will take months to know how they will pan out. However, while Washington and the heartland wait to see what the results of these stimulative measures will be, one group that should not be waiting is mortgage shoppers. For anyone looking to refinance, and especially for prospective home buyers, the best time to act might be the present.

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