Name Calling, Market Whiplash and Mortgage Rates

Oh the irony of the mortgage market! Loan rates are falling, home prices are the cheapest they’ve been (in most, but not all markets) in a decade, but the consumer is spooked by the prospect of the U.S. defaulting on its debt payments. (In short, what kind of crazy person would sign a home purchase contract in this environment?) Meanwhile, the GOP refuses to close tax loopholes (also known as “raising taxes”) and the liberal wing of the Democrats refuse to touch Medicare and Social Security. This morning, the top Republican in the Senate, Mitch McConnell of Kentucky, accused the President and Democrats of "deliberate deception" of the public during the ongoing negotiations to cut government spending and increase the nation's debt limit. But so far, ‘Mr. Market’ believes a debt ceiling deal will be reached because the yield on the 10-year has not yet spiked. Or is that a reaction to Italy and Spain probably defaulting on their debt and the U.S. (still) being considered a safe haven? Hang onto your seats…