The Federal Reserve will be meeting today and tomorrow to discuss the state of the economy. This meeting comes after several days of stock market instability due to Chinese market volatility and some big drops in the subprime mortgage rate numbers. This subprime mortgage “meltdown” has caused 2 days of drops in the stock market. The subprime meltdown is the result of 2 simultaneous blows: (1) an unexpected rise in delinquencies (2) creditors resorting to stricter underwriting, effectively causing a liquidity crunch.

This morning the market rose slightly with news that new home and apartment construction rose last month by 9 percent last month. It looks as if the Fed will continue it’s wait and see approach, possibly longer than previously expected. I don’t think they will be cutting rates as some analysts had predicted.

 This is good news for the mortgage market, expecially if you have an adjustable rate mortgage that is adjusting based on the prime rate. It looks like you payments will be holding for the time being.