Let's Take a Brief Break to Look at an Interesting Prediction

This is a reprint of part of a forecast I received from Brian Dragoo of PMC Mortgage (a wholesale lender):

Where is the Fed these days? “The market” indicates Federal Funds are poised to drop from their current 5.25% to 5.00% in March and then to 4.75% in September 2007. The forward curve (the rates at which buyers and sellers are setting into the future) tends to be better than the top economists over time, and investors are building in 2 rate cuts in 2007 along with the belief that long-term rates will barely budge for the next 5 years.

This is great news! The potential of decreasing interest rates coupled with a stable market makes for lower interest rates for both fixed and adjustable loan programs.