March 30, 2009
March 30, 2009 by admin
The auto industry is back in the spotlight as General Motors and Daimler Chrysler have both failed at their recent attempt to go back to Washington for additional loans. The companies have been given an additional thirty days to revise their plans to execute a profitable business. As part of the governments decision to extend their time frame to approve additional loans in the future, the CEO of General Motors, Robert Wagner has been forced to resign. The government is now signaling that their is a realistic chance that both companies could be looking at a chapter 11 bankrupcy restructure in the near future. Both companies have a large burden of debt, unions that are not eager to further negotiate and the challenge of trying to downsize in one of the worst economic periods of the past one hundred years.
Financial stocks have also been paring gains from the past two weeks. Concerns over a global effort to stabalize the world economy through a universal stimulus program have been greatly dimished by comments out of Europe over the weekend. It is clear that not every country shares President Obama’s opinion that you can continue to borrow and spend your way out of a recessionary period. There are a number of countries that are quite concerned that the U.S. is headed for disaster as they increase their deficit to three trillion dollars.
The slide in the stock market is good news for mortgage rates. The ten year bond is now hovering under 2.7% and long term fixed thirty year mortgage loans are now back at five percent and under five percent if the borrower is willing to pay points to buy the rate down. The low rates should be a boost for mortgage lenders capitalizing on refinance applications and new home buyers entering the market and taking advantage of the governments rebates.