MORTGAGE UPDATE:
Lending update courtesy of MS&C Mortgage,
an affiliate of Wells Fargo

Market in Review: The Wells Fargo View
Fed Funds Rate And The Market Correction

For the first time since August 2007, the federal funds target rate remained unchanged at 2% after the June meeting (see chart). Market views are mixed about whether or not the Fed will increase the rate during the remainder of the year, hold steady or even drop the rate again. Factors influencing this decision include rising energy prices and food costs, which will likely remain a concern for consumers.

In its latest meeting, the Fed said, “Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased.”

The length of the market correction will depend on many factors including employment growth and interest rates, as well as the speed at which builders and REALTORS® can sell the current supply of homes and investors regain an appetite for mortgage assets.

The Wells Fargo View: Wells Fargo competitively prices all loans based on market conditions and credit-risk. According to Inside Mortgage Finance, in the first quarter of 2008, our company experienced a gain in market share, going from 11.2% at the end of 2007 to 13.7%, from consumers looking for a quality lender offering high-quality products and services. We welcome customers seeking a sound, responsible mortgage lender and servicer.

First-time Homebuyers Have Opportunities

Typically, housing prices begin to stabilize when first-time homebuyers entering the market outnumber the homes for sale. First-time homebuyers stimulate the production of new homes and enable sellers of existing homes to move up. The market slows down when first-time homebuyers are on the fence.

A buyers’ market typically has a six-month supply of existing homes. According to a recent Harvard study, in early 2008, the U.S. had an 11-month supply of unsold new homes and a 10.7-month supply of existing single-family homes, making this a buyers’ market. Of course, conditions vary from market to market.

Because home prices have declined in many markets, entry-level homes hold more opportunities for first-time homebuyers in many areas of the country. According to the National Association of Homebuilders, with first-time homebuyers returning to the market, sales could rise to almost 700,000 homes by the end of 2009, which will reduce the number of houses on the market.

The Wells Fargo View: The Wells Fargo View: Wells Fargo inspires, educates and enables consumers looking to enter homeownership. We offer Homebuyer Workshops which emphasize the nuts and bolts of the process for first-time homebuyers, as well as repeat and investment buyers. Other programs include the Affordable Home TourSM and Steps to SuccessSM, a credit management education program. Additional information about credit management is available at www.wellsfargo.com.

Wells Fargo & Company is a diversified financial services company with $575 billion in assets, providing banking, insurance, investments, mortgage and consumer finance to more than 23 million customers from almost 6,000 stores and the internet (wellsfargo.com) across North America and elsewhere internationally. Wells Fargo Bank, N.A. is the only bank in the U.S., and one of two banks worldwide, to have the highest possible credit rating from both Moody's Investors Service, "AAA," and Standard & Poor's Ratings Services, "AAA." Information is accurate as of date of printing and subject to change without notice. Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A. © 2009 Wells Fargo Bank, N.A. All rights reserved.