The Mortgage Man
Get more out of your mortgage experience!Archive for stock market
Mortgage Bonds Trading At Historic Highs
Today the jobless claims report came out for December with a total of 524,000 jobs lost. This was worse than projections of 500,000, but far better than rumors of nearly 700,000. So far this morning, bond traders are reacting to the rumor and not the projection by selling mortgage bonds.
As mortgage rates continue to be unbelieveably low, the stock market is struggling. Wal-Mart reported that due to one of the worst holiday shopping seasons on record, they will not meet expectations for the 4th quarter. This continues to fuel uncertainty in the greater economy, and economic uncertainty drives investors to sell stocks and buy bonds. Long term, this is good for mortgage rates and the real estate market.
Also, the FED announced yesterday that through the first 3 days of this week, they bought $10.2 billion in Fannie Mae, Freddie Mac and Ginne Mae mortgage backed securities, part of their overall plan to buy up over $500 billion in MBS’s between now and June.
Friday November 14, 2008
This weeks financial news wrap up.
It is interesting the times that we live in right now. The 500 point intraday swings in the stock market have become so commonplace that no one even gets excited about it anymore. Even yesterday, there was an intraday low of -331 only to rally in the afternoon to +552, a nearly 900 point intraday swing. What is even more curious is a buying rally after incredibly bad economic reports.
All of this leads to the conclusion that the markets are trading almost entirely on emotion. Fundamentals appear to have no affect, and that uncertainty bleeds over to the bond market as well.
Mortgage bonds started the week on a downward slide, then recovered Wednesday and Thursday morning with a nice rally. That rally began losing steam yesterday afternoon and continues to show weakness this morning. Daily volatility aside, mortgage rates long term are better than they have been in about a month and continue to trade in a near sideways channel.
Conventional wisdom would lead us to believe that as poor economic data comes out, investors would pull money out of stocks, invest in bonds, driving up the yield and driving down mortgage rates. But, as previously discuss, conventional wisdom does not appear to have a place in this market.
All in all, if you have a mortgage loan in process that you have not yet locked, my bias would be towards locking to protect against uncertainty.
For today’s mortgage rates, or to apply for a mortgage loan, go to SteveRussellOnline.com. Or call 888-257-8383 for a free consultation.
Worst Week Followed By Best Day Ever
After the stock market’s worst week in history, it closed yesterday with the highest gain in history.
What a roller coaster ride for investors. After a record for the largest 1 week decline ever last week, investors came back with a vengence yesterday to close the DOW up 936 points. That makes yesterday the largest single day point gain in history, and the 5th largest perecntage gain ever. Activity like this begs the question of whether we have found the bottom in the equity markets or not.
No one will know where the bottom is until we have already passed it, but the level of volatility and panic in the sell offs last week suggest that we are either there now, or at least we are close. Since this blog focuses primarily on real estate and mortgages, how will this affect housing?
There is no direct connection between the stock market in general and the real estate market. But, they are all slices of the same economic pie. The typical bear market lasts 13 months with a resulting decline of 30% to 40% in the stock market. Right now we are in the middle of the 12th month of market decline from its highs in October 2007, and the total point decline is around 41%. Based on this information alone (and there are many more factors at play), it would signal that we are at the bottom, or at least close to it.
The bigger problem in the real estate market is inventory vs. willing buyers. Because foreclosures are still coming on the market in record numbers, we will have to remove some inventory before sellers can really make up any ground. But, for buyers, this is the best buying opportunity that has existed in decades. Locally (in North Florida), home prices are back to 2003 levels, and the deals available to buyers are jaw dropping now. Nationaly, the numbers vary by area, but there are tremendous buying opportunities across the country.
Lending standards have tightened, but there is still mortgage financing available (contrary to the inpression that you might get from the news). For more information on the financing options available to you, go to www.SteveRussellOnline.com, or call me at 888-257-8383.
The Mortgage Man 
You must be logged in to post a comment.