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.
December 8, 2008
December 8, 2008 by admin
Mortgage rates have moved higher over the past week following a lead from the stock market. The stock market jumped in early trading as expectations that the government could be moving forward with a bailout for the auto industry provided optimism for the economy and slowing down future job losses. The ten year bond opened the day at 2.72%. still hovering near 2008 lows. Fixed mortgage rates have moved up over the past week as the spread for mortgage backed loan securities is again growing wider.
President elect Obama has promised a broad and aggressive plan to help the ailing economy including proposals to spend money on infrastructure. The plan could reach 1 trillion dollars in total as he works agressively to pull the country out of it’s deepest recession since the great depression. Global stocks have also rallied on the news of the U.S. spending plan.
December 1, 2008
December 1, 2008 by admin
The stock market started the month of December on a down note. The market appears to be selling off aggressively following last weeks holiday rally. The market is digesting global news of economic challenges in Asia and Australia as well as local news that factory orders reached a twenty year low. This follows up a nervous weekend following the Black Friday, a closely watched day to monitor retail traffic.
Mortgage rates started the day near 2008 lows. The ten year bond continues to move lower as investors are looking to the security of bonds. Mortgage rates are now well positioned under six percent following the rapid decline started by last weeks Fed announcement of their direct purchase of mortgage bonds. There are a number of key economic reports due out this week that could move the market, including Friday’s jobs report which could have a large impact on stock prices and mortgage rates.
November 28, 2008
November 28, 2008 by admin
Black Friday, the biggest shopping day of the year will be closely followed by the stock market and economists throughout the world. This day marks the beginning of a critical period for the countries retail industry and will be a pivotal gauge as to the overall health of the U.S. consumer market. The stock market is riding four straight days of gains into this pivotal day, but volume in the market will likely be lower following the Thanksgiving holiday.
The U.S. housing market could use a boost and is likely to get a boost from the sharp decline with mortgage rates over the past week. The ten year bond opened at 2.95% on Friday, near historic lows. Fixed rate mortgage loans are in the mid five percent range, but could move higher quickly with market related news. Locking into near historic low mortgage rates would be a great move for any homeowner who is in an adjustable rate loan product and is concerned that their interest rates could be moving up in the upcoming years.
November 23, 2008
November 23, 2008 by admin
The stock market finished the week down almost 5%, despite a 500 point rally on Friday. Investors are moving into bonds at record rates and the ten year bond closed in on the 3% level for the first time in over ten years last week. Consumer confidence continues to be a major challenge for both the economy and stock market.
Some of the worlds largest banks, Citigroup and UBS may need to raise additional capital in the coming months as their are new concerns that the lenders corporate mortgage portfolio could have similar challenges that faced the residential market in the next 12 months. The market will study closely housing related news this week in a shortened trading week with the Thanksgiving holiday in the U.S.
Fixed rate mortgage loans are now under six percent for the fist time in the past three months. Consumers who are thinking about refinancing, can benefit from the rapid decline in the stock market. Rates and the market continue to be very volatile, so locking into a great mortgage rate could offer some long term savings.
November 7, 2008
November 7, 2008 by admin
The stock market is looking to rally off of a two day sell off as the market continues to digest news that the economic recession could be gaining momentum. The October jobs report came in and indicated that unemployment continues to climb as the unemployment rate is now at 6.5% nationally. The market lost over 240,000 jobs last month, higher than the projected 200,000 jobs most economists had predicted, but better that the 300,000 total that some economists had feared.
Mortgage rates have turned lower this week following a sell off of almost 10% from the stock market. Fixed mortgage rates are heading back into the low six percent range. The real restate market is desperate for some positive news and mortgage rates moving lower will help with bringing more buyers into the market as we head towards the seasonally slower months.
November 5, 2008
November 5, 2008 by admin
The market is taking some profits following the election. Democrats have gained a large number of House and Senate seats as well as having Senator Obama run away with the Presential Election. The country is looking to turn the page economically on a dramatic down turn with housing and a growing unemployment problem.
The market has sold off as investors are pulling out and taking some profits off the table in lieu of the pre election run up. Mortgage rates continue to hover in the six percent range as the ten year bond is around 3.72%. Homeowners are holding out with the hopes that the market will gain some stability through a government sponsored bailout program. There is growing speculation that a portion of the TARP money will be earmarked for helping home owners. Some of the countries largest banks including JP Morgan and Bank of America have stepped up there efforts to pro actively slow down the rate of bank foreclosures on their books.
October 29, 2008
October 29, 2008 by admin
Following one of the largest rallies in recorded history, today the Fed lowered the fed funds rate down to one percent. The stock market which has dropped over thirty percent in the past six months appears to be closing in on a bottom. Most traders believe the market is now in a trading range between 8000 & 9000 and that the bottom and top of this market is 7800 and 9500, if the top or bottom of this market is breached then the markets could move agressively.
The change in the Fed Funds rate was expected by most economists and a good sign that the Fed is working to help to restore confidence into the market and help to slow down the recessionary fears. Mortgage rates have been trending up and are still above six percent on most fixed rate loan programs. The stock market is likely to continue to be volatile and could have a large move next week following the election.
Credit card rates could move lower with another fed rate cut
October 26, 2008 by admin
The FOMC meeting this week could add some needed relief for the average consumer. The negative news that has been flowing from news papers and media outlets have pushed the idea of a recession from a possibilty into a full blown reality.
Consumers who have credit cards that are directly tied into the prime rate should are likely to see an additional decline of 1/2 pt to their interest rates. The prime rate has dropped sharply in 2008 as the fed has moved to drop the fed funds rate to help unfreeze the credit markets, as the fed funds rate has declined lenders typically follow suit and lower the prime rate.
Not all consumers will benefit from the rate cut as card issuers often have floors tied into the rates they offer to consumers. This essentially means they reserve the right to have a limit to how low interest rates can move on their cards.
Lenders have pulled back sharply on the amount of offers they are now sending to consumers. The fallout in the credit markets has effected consumer loans, auto loans and credit cards as banks look to mitigate the risk in their credit portfolios.