March 5, 2009
March 5, 2009 by admin
The stock market continued losing ground on Thursday erasing all of the gains from the rally earlier this week. The growing concerns over the banking industry continue to pressure the stock market and industy bellweathers such as Citigroup and Bank of America have seen their market caps drop by over 80% in the past twelve months. Â The market was not able to rally around earnings from Walmart that showed a better than expected quarter for the retail giant.
The housing sector is not racing to endorse the recent moves by the government to help struggling home owners refinance their mortgage or obtain a loan modification. Today, the mortgage bankers association reported that thirty day delinquincies are now almost eight percent as home owners continue to lose ground in lockstep with job losses. Most economists believe that the only realistic chance to place a bottom to the housing market will be a comprehensive adjustment to principal loan balances for every home owner. The number of properties that have loan to values of 125% or higher is growing in key states such as Arizona, Nevada and California and the recent government proposal will due little to assist these home owners who live in the hardest hit markets in the country. Mortgage rates have trended up over the past week despite the drop in the stock market. The yield on the ten year bond closed at 2.81% on Thursday and fixed mortgage rates nudged up to the low five percent range.
March 4, 2009
March 4, 2009 by admin
The stock market is trying to regroup following a streak of losses that have seen over a 20% decline in 2009. The market is desperate for some good news, today ADP reported that the private sector lost nearly 700,000 jobs in the month of February. The market is bracing for Fridays report on non farm payrolls which could is likely to show another staggering loss of jobs in the United States. The stock market has now moved into a twelve year low as investors are agressively pulling money out of equity positions and moving into government bonds or cash positions. The government today released futher details on the planned loan modification program that is projected to help up to nine million home owners who could be facing foreclosure during 2009. Lenders are scrambling for solutions to try slow the rate of home foreclosures as an estimated one in five households in the United States value is lower than the outstanding balance on the mortgage. The housing market will continue to create challenges for the economy until there is a solution in place to help homeowners stay in their homes and have their mortgages restructured to lower the principal balance of their mortgage to a level equal to their homes new value.
The housing market has not seen much of a lift following despite historically low interest rates. The larger challenge facing consumers is that lenders are requiring higher loan fees to offset credit and loan to value guidelines from agency lenders (Fannie Mae & Freddie Mac). These changes are extending the breakeven period on refinances and causing consumers to delay moving forward with locking into lower mortgage rates.
March 2, 2009
March 2, 2009 by admin
The stock market moved to a ten year low following grim news out of insurance giant AIG. The worlds largest insurance company posted a loss in excess of sixty billion dollars during the last quarter. The historic loss required the federal government to again pump additional funds into the company to keep their ratings in stable position as they need pledge additional capital. The government agreed to rework an earlier agreed upon loan and offer up an additional thirty billion dollars. AIG is losing billions of dollars for being on the negative side of guarantees primarily on derivatives and CDO’s related to the mortgage industry. The stock market has now lost over 20% in 2009 and there appears to be little optimism left for a rally prior to this Fridays report on the job market when the labor department reports numbers related to the February jobs report.
Mortgage rates remain relatively flat, even with the sharp drop in the stock market. The yield on the ten year bond was flat at 2.88% on Monday and fixed rates on thirty year loans remained in the mid five percent range.