In his second day of testimony on Capitol Hill this week, Ben Bernanke’s message seemed to be that a credit crunch-fueled recession is more of a concern than inflation right now. Which signals that more rates cuts are coming. Mortgage bonds have rallied on the news, bringing rates down. Next Fed meeting is March 18,
February 2008
Today Fed Chairman Ben Bernanke gave testimony about the economy and credit markets to the House Financial Services Committee. During the Q&A, Representative Luis Gutierrez (D-IL) asked why mortgage rates are going up, even though Fed rates are lower. It is truly frightening that the lawmakers who regulate the financial markets don’t even know how
Fixed and ARM rates are up by almost .5% since last week, and we’re still seeing .25% to .375% swings from day to day. Rates drop on recession concerns and rise on inflation concerns, and markets can’t decide which is the bigger issue. This is the reason for the volatility, and rates are up because
Technical analysis—the study of trading trends and data—isn’t always the best way to determine the fundamental value of a security. But it’s useful for short-term decision making. Mortgage bond chart patterns can tell good lenders a lot about the right time to lock a mortgage rate for a borrower. After a rough trading week, and
Of all the deep analysis of the subprime crisis, this is perhaps the deepest. It’s certainly the most straightforward analysis to date … comprised of the most rudimentary of stick figures all beautifully packaged up into a slick, sophisticated PowerPoint presentation. Kind of like the most rudimentary credit quality all packaged up into slick, sophisticated
According to the San Francisco Chronicle, rates on the new conforming loan limits are up in the air. Basis Point writer Julian Hebron was quoted in the article.
Basis Point contributor Julian Hebron was quoted on San Francisco Real Estate blog SocketSite regarding the wave of HELOC freezes gripping the nation. Great headline on their part too: “When Hell HELOCs Freeze Over” SocketSite was sourcing Hebron’s original HELOC freeze tips posted on this site. His piece discusses what to do if you’re considering
Be advised that most banks and lenders nationwide have begun freezing Home Equity Line of Credit 2nd mortgages. Even borrowers with significant equity and perfect credit have been receiving HELOC freeze letters. In many cases, it’s not about borrower creditworthiness but rather the institutions shoring up their balance sheets. The reserve requirements banks need for
Retail sales came in better than expected Wednesday and rates started rising. It continued today when bond markets interpreted Ben Bernanke’s Senate testimony as an indication further rate cuts are more difficult because of inflation concerns. Retail sales are sometimes higher in January as consumers spend holiday gift certificates. But rates should correct in coming
With HR-5140, the new economic stimulus package signed into law today, this analysis seemed appropriate. Yes, you’ve probably already gotten it on email 100 times, but it’s good. +++++++++++++++++ Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way
Warren Buffett said this morning that his company Berkshire Hathaway has offered to reinsure up to $800b in muni bonds currently backed by troubled firms MBIA, Ambac and FGIC. Stocks are rallying sharply at the cost of a deep bond sell off. Mortgage bonds are down 38 basis points and Treasury bonds are off 75
In conjunction with Treasury Secretary Henry Paulson, six major lenders announced a plan to stop foreclosures on defaulting borrowers to give them a chance to keep their homes. This is a good sign that banks are willing to help ease the housing market pain, and also a tacit admission of the perils of loose underwriting
Fixed rates are even versus last week and ARM rates open the week down .125% from last Monday, but the volatility continues with rate swings of up to .375% on any given day. This is proof that credit markets are still not functioning properly, and that’s the topic on Capitol Hill Thursday when Fed Chairman
This week’s Economist discusses how economic weakness is different from region to region, and includes this map of unemployment rates and house price corrections. If this map didn’t prove it, I had a client lose an offer on a home in Seattle two days ago–not because they didn’t make a great bid, but because there
The Senate finally signed off on the economic stimulus package which includes tax rebates to individuals, tax benefits for business and conforming loan limits up to $729,750 depending on median home prices in a given area. The higher limits were expected to run through 2008, and go into effect as soon as late-February. Now it
Warren Buffett said Wednesday that the finance firms who “brewed this toxic Kool-Aid” of risky mortgage and other derivative products “found themselves drinking a lot of it in the end.” No big surprises here as the credit bubble unwinds. Supporting a point we’ve been making, Buffett also said money is cheap but the re-pricing of
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