December 31, 2008
December 31, 2008 by admin
The stock market ended 2008 on an up note as investors bought back into the market looking towards an optimistic begining to the 2009 year. The stock market which dropped almost 40% of it’s value in 2008 has been on a roller coaster ride as investors have increasingly pulled money out of equity positions. Stock values for almost every company listed in the S & P 500 index have declined sharply this year under pressure from earnings and falling consumer confidence.
The market will look sharply at the new Presidential administration and their economic and monetary policies they implement in the next 90 days. Oil prices have declined sharply over the past 4 months and consumers have benefitted from sharply lower prices for gasoline. Mortgage rates ended the year near historic low levels and fixed rate mortgage loans remain in the low to mid five percent range.
Auto financing should be easier with GMAC’s loan from the government
December 30, 2008 by admin
Consumers may be able to start purchasing cars in the near future through General Motors as the companies finance arm received a much needed boost from the governmenet this week as a six billion dollar loan to the company has been approved through it’s recent application to become a bank holding company using funds for the tarp program. The finance company has struggled to make loans available for consumers who are looking for cars as the credit markets have deteriorated and there has been no secondary marketplace to securatize loans.
General Motors received a much need bridge loan a few weeks ago that is desinged to help the company make it through the first quarter of 2009 while it works on a restructuring program. The ability to finance and sell cars will certainly assist the company with it’s plan to move towards profitability. Consumers are going to benefit from the latest move by the governement as car financing for both new and used cars has become extremely challenging despite a move earlier this year by the government to provide over $350 Billion to banks to help them increase their lending and boost the economy. It is expected that both Ford Motor company and Chrysler Financial will receive similar assistance to their finance arms in the near future to further boost these companies ability to sell and finance their cars and inventory.
2008 draws to a close
December 28, 2008 by admin
One of the worst years in history for the economy is drawing to a close this week. There will be many lessons learned from the down turn with the nations and world economy this year. The year started with pressure from the housing market and continued to get worse. The government was slow to react to the foreclosure disaster that began to gain momentum in 2007 as subprime lenders started folding up.
This year saw two of the nations largest lenders Countrywide & Indymac bancorp end operations, the nations two largest agency lenders Fannie Mae & Freddie Mac forced into a government takeover, companies such as BearStearns & Lehman Bros forced out of business or into bankrupty. The stock market lost over 40% of it’s value and the job market contracted every month of the year. The economy began to steam roll down in mid September and Oil prices went from $150 per barrel to under $40 per barrel in a little over six months time. Auto manufactures were on the brink of bankruptcy, if not for a last minute bridge loan from the Whitehouse. The world soon realized that every economy is dependant upon growth and no countries are immune to economic slowdowns. The European central bank cut rates agressively and led the way in helping to stabalize the lending industry with a lifeline to the banking industry that was followed by the U.S. Treasury. The fed has cut the fed fund rate down to .25%, a historic low point, and one that has helped to bring mortgage rates down to historic low levels.
2008 will be remembered as one of the worst economic periods since the great depression and will have a tremendous influence on the world moving forward. The days of easy credit and bank lending have come to a dramatic end as lenders are closely scrutanizing every loan moving forward. Almost every consumer and worker will be glad to see the year end with hopes of a new administration and financial future in 2009.
Freddie Mac confirms mortgage rates are at historic lows!
December 24, 2008 by admin
Home owners are rushing to lock in refinance mortgage rates at historic low levels. According to a report released today from Freddie Mac, one of the countries largest agency lenders. Fixed mortgage rates have dropped to the low five percent range for the first time since they have been publishing their rate updates. Fixed rate mortgage loans have dipped below five percent, but have moved up slightly off of these record lows. Refinance applications have surged as lenders are reporting a large increase with mortgage applications as home owners look to lock into fixed rates and lower their housing payments.
The housing industry could benefit from the drop with interest rates heading into 2009. The government appears to be committed towards helping to turn around the real estate market and help put a bottom into the dramatic drop in home values. The historically low rates are certainly going to help with this effort to help jump start the housing market rebound.
December 23, 2008
December 23, 2008 by admin
The news out of the housing sector sent stocks lower in trading on Tuesday. Existing home sales for the month of November dropped by over eight percent for the month. Home prices have declined by over 13% as home foreclosures continue to erode home values. The news sent the stock market lower as investors continue to deal with reports on a struggling U.S. economy. The market had little reaction to a revised Q-3 GDP report that was in line with expectations.
Home mortgage rates continue to be extremely attractive, and by all accounts consumers are refinancing into the low fixed rates at a rapid pace. There is a concern that the low rates may not be enough to bring home buyers into the market, as the free fall in home prices leaves many buyers on the sidelines as they hold out for even better home bargains. Mortgage lenders have reported surging applications on refinances, but little movement on applications for purchase mortgages.
Credit card changes coming soon to benefit consumers
December 19, 2008 by admin
The banking industry has caved into reforms on credit card regulations, rates and marketing techniques. In one of the most lobbied moves from consumer groups to try and ease up on predatory credit card lending practices. Consumers have been after the office Office of Thrift and Supervision to force banks to make changes into the perceived unfair lending practices.
Key changes that will go into effect in July of 2010 include the elimination of credit card companies ability to dictate payments being credited to balances with the lowest interest rate. Restrictions on a banks ability to retroactively raise interest rates or make changes to the card terms within the first year of issuance. All bills will need to be mailed 21 days prior to the due date. Eliminating a banks ability to charge retroactive interest will be one of the major changes with the new rules, and could end up eliminating upwards of 10 billion dollars in fees to the banking industry. There is an outside chance the government could look to introduce the consumers credit card bill of rights legislation when the new Congress is seated in 2009, which could further restrict the banking industry and credit card companies.
December 18, 2008
December 18, 2008 by admin
The stock market turned lower again in mid day trading on Thursday as concerns over the economy and the fallout from the Bernie Madoff investment scam are garnering most investors attention. The stock market received welcome news this morning from the Philly Fed reported which showed a slight improvement over the November report for the manufacturing industry. Oil continues to trade lower, despite news out of OPEC that they would follow through on a 2 million barrel per day cut to production.
The housing industry continues to receive support from falling mortgage rates. The ten year bond opened at 2.09% on Thursday, hovering near historic lows. Fixed rate mortgage loans are now well into the low five and high four percent range with most national mortgage lenders. Mortgage rates near the historic lows could last for the next 30-60 days, but there are no long term guarantees due to the rapid fluctuations with the stock market.
December 17, 2008
December 17, 2008 by admin
The housing industry will see a large benefit from the moves made by the FOMC to address the economy and real estate markets. The Fed moved agressively in lowering the Fed funds rate down to .25% on Tuesday. This move will help home owners with equity loans and the stock market jumped following the news. The housing industry got some great news as well as the Fed promised to continue to agressively target the housing market and credit markets. Their promise to continue to work towards improving the credit markets and trying to improve liquidity for mortgage rates has helped to produce another sharp decline with interest rates as mortgage rates are now hovering below five percent for the first time in histroy. These historically low mortgage rates may not last very long and could be a great method for home owners who are looking to refinance and free up cash flow ahead of the economic recession that could last well into 2009 to help improve their household budgets.
Fed cuts key rates to historic low levels
December 16, 2008 by admin
The FOMC cut rates to historically low levels today in a move aimed at spurring economic growth and lending. The Fed today cuts the fed discount rate down to .25%, a 75 basis point cut from its previous level. This historic move will benefit consumer with loans that are directly tied into the prime rate. The dramatic cut with rates is the last big move that the FOMC can offer related to cutting the monetary policy to try and spur lending. The fed remains committed to ramping up other programs to try and spur growth. The moved earlier this month to purchase over 700 billion of mortgage backed loan securities, a move that directly resulted in a dramatic drop with mortgage interest rates. The economy has been taking significant steps backwords over the past 90 days as job losses and home foreclosures are surging. A recent report indicated that one in every ten homes in the U.S. is behind on their mortgage payment as consumers struggle to maintain their payments as the economy worsens. The Fed will have to work in collaboration with the government and treasury to help spur a rebound in economic growth in 2009.
December 13, 2008
December 13, 2008 by admin
The stock market rallied late on Friday as investors looked past the Senate’s decision to fillibuster the auto loan bailout package. The market was off by over 300 pts in pre market activity as the news hit that the auto industry may not receive the bridge loan that they desperately need. The market got an immediate boost when the white house acknowledged that they would look to use funds from the TARP program to provide working capital until the new administration gains its foothold in Janruary.
The market also reacted favorably to a PPI report that indicated their is a low level of producer price pressure in the market. This will make it easier for the FOMC to meet and potentially further reduce the Fed Funds rate next week. With a prime rate below 5%, consumers will save who have credit card debt and home owners with home equity loans. Mortgage rates continue to hover near historic lows for 2008 and offer great opportunities for home owners looking to refinance or purchase in the near future.