Things have changed drastically in the mortgage world because of recent happenings. What’s up next for us now? Is there any way to know if the rates will continue to go down?

Usually, with conditions so tight in the lending markets, one would expect lenders to lower their rates to attract the best customers. However, the banks are doing the reverse, and raising rates in an attempt to build revenue.

This seems like a bad business decision; usually a business will lower prices when business is bad so that they can get whatever business they can. This shortsightedness is not limited to the home loan industry; credit card companies are doubling and even tripling their rates in response to defaults on the part of customers in this depressed economic environment.

In the good old days, a slowdown in the economy would usually mean a lowering of interest rates since banks would try to attract more customers with attractive rates. Today, though, the financial industry is so disrupted that matters was considered normal before are not now.

How should a borrower view this crisis, and what steps should he take? Is it smarter right now to wait out this unusual phase, in the hopes rates will fall back down, or take advantage of whatever credit is avaible before the economy gets worse?

Not only is there a current, there are many who even feel there is a depression coming, which will surely lead to deflation. Normally, deflation will in turn lead to lower interest rates, so this indicates a wait and see attitude is the best to take right now.

Some lenders are still actively soliciting borrowers. Many small banks are not hurting from the credit crunch that has hobbled many big lenders. This was because a lot of them were too small to expand into this highflying arena of subprime loans.

A second supporting argument for waiting is that housing prices continue to fall, with predictions of futher price cuts of as much as 35%, even after the 20 to 25% decreases already seen. Case-Schiller, a research organization that conducts such studies, reports that in some regions prices have plummeted 25%, with national averages at 17%. If a combination of lower interest rates and lower home prices are in store for the future, it may be wise to delay a home buying decision.