Frank Nothaft Drop Quotations

The Federal Reserve's recent cut in interest rates and a continued concern over weakness in the overall economy contributed to another drop in mortgage rates this week. In spite of the slowdown in other sectors and a lessening of consumer confidence, declining mortgage rates since the first of the year have helped to support housing activity.

Financial markets are feeling more confident that the Fed will not raise rates any time soon. Add to that the fact that recent economic data shows core inflation is less than the market expects, and we see mortgage rates drop once again.

There's about $6 trillion in single-family mortgage debt outstanding, and total home value is about $13 trillion, which means there's about $7 trillion in home equity outstanding. Last year was a big year for liquefying home equity -- about $100 billion. That's a drop in the bucket compared to $7 trillion.

Both existing home sales in June and housing starts in July took a breather, dropping to somewhat more sustainable levels of activity,