The Mortgage Man

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Archive for Oil Prices Hit New Record

Friday July 11, 2008

Volatility in stocks leads to a mild bond rally.

Bonds are flat at the time of this post, but they weren’t that way earlier.  We have been up and down and back to the middle today on a variety of financially related news.

Oil prices hit a new high this morning after an early spike of almost $5/barrel to push it over $147 for the first time.  This spike in oil caused a sell off in stocks, and a sell off in stocks went into the bond market creating a little upward movement this morning.

If you haven’t seen the news yet, Fannie Mae and Freddie Mac (the nations 2 largest secondary mortgage market guarantors, and holders of over 50% of the total $6 trillion in existing home mortgages) are hurting.  Secretary of Treasury Henry Paulson had some possitive things to say about them yesterday and how the government can help to fortify their position.  Then, the New York Times reported that the government is considering a contingency plan to take over Fannie Mae and Freddie Mac.  This, of course, is not good news for anybody, and traders were lining up to sell stock in both companies today leading to a 40% decline in value.

Now, the bond market feeds on bad news, so there was a rally based on all of the above mentioned negativity.  Then, the report about US exports came out with a lower than expected trade deficit, and much better than expected foreign consumption of US goods.  Apparently, the weak dollar makes exports to foreign countries more palatable, and our friends across the pond are buying more of our goods as a result.

All in all, I will stick with my recommendation from yesterday to lock your mortgage rate if you have a short term mortgage in processing.  We are still facing a significant upside resistance level at the 200 day moving average, and it is not likely that any gains that may be obtained would be worth sitting with baited breathe and calling your mortgage banker 4 times a day.  Go ahead and lock, then enjoy your weekend.

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Thursday May 22, 2008

Today’s Mortgage Market Is Battered Again By Oil Prices And Threats Of Inflation!

With oil prices hitting another record high at over $135 per barrel, inflation fears are stirring the mortgage bond market to run for the hills.  Mortgage bonds have fallen through 3 major levels of support at the 25 day, 50 day and 100 day moving averages.  For the market to bust through 3 different levels of support is significant, and if you have a mortgage loan working that is not locked…I highly recommend locking today to protect from continued losses.

The jobless claims report came out a little better than expected at 365,000 vs. the projection of 372,000.  Even though this report was better than expected, it still shows significant weakness in the jobs sector, and therefore did not pose any immediate help to the financial markets.

In other financial news, UBS AG reported an additional write off of $19 Billion in subprime mortgage losses.  This is not good news for the sector in general as it indicates that we are not out of the water yet with the credit crisis.