Interest rates Increase

Excerpts from HSH Associates newsletter for the week ending July 20, 2007:

Despite downdrafts in key benchmark interest rates, mortgage rates for good-credit borrowers kept rising this week, with the average 30-year fixed-rate mortgage (FRM) posting a 52-week high of 6.88%. Holes in the subprime landscape keep appearing, and investors may be beginning to shy away from even certain good-credit quality mortgages. That disdain for buying loans may be reflected in the spread differential between the 10-year Treasury and the average 30-year FRM. This week, that gap stands at 185 basis points (1.85%), the widest in 17 months, with the implication that investors are demanding higher compensation for risk than they were just a few months ago.

                                                  Fixed Rate                   Variable

Survey Area	15 Year	30 Year	Composite	1 Year	Composite
NW/National	6.53%	6.88%	6.71%	6.15%	6.47%
CA/Statewide	6.61%	6.94%	6.79%	6.34%	6.56%