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We see mortgage rates heading down in to the US Holiday with Purchase Mortgage Applications up just slightly as we head into Black Friday Shopping Season. As spending turns to things other than housing will the Purchase Market continue to hold up?
I do expect the coming months to stay very strong due to record high equity markets. Investors will want to diversify their investments to protect their gains.
So we are now just more than 5 weeks after the one of the biggest political upsets in history and we can start to access how the worlds financial markets are reacting. While stocks are now enjoying one of the all time largest upside moves in a similar time period, rates in the US Bond Market are also exploding higher. What this means for the overall economy can be reasonably surmised
You will have the increasing confidence with the stock portfolios showing great gains for most of us. That confidence will be buffered however by the realization that carrying costs on everyone’s debt will no lurch upwards. For those of you with adjustable rate mortgages or with HELOC’s that float with the prime rate get ready to pay up in coming months.
It looks like the more that BX moves to be one of our nations top landlords and Real Estate Banker, the more it’s shareholders are getting crushed. You can see by the chart below that the last half year that the stock has been crushed over 29%. Of course you did get half of the 6.80% dividend to comfort your huge losses. LOL. Are they still among the smartest guys in the room?
Mortgage rates had a nice day and this is encouraging given the reality that the FED will most likely be moving short term interest rates higher on the 16th at their next FOMC meeting. When the world starts to panic most investors turn to the safety of our bond market. This chart shows the opposite flows for the S&P 500 vs the TLT, the ETF for the medium term Government Bonds.
Rates had a very up and down week with it looking more and more like the Fed will raise rates this month.
We had a nice rally in the proxy for the mortgage bond market with the TLT rallying to a price of 116 before backing off a bit late on Friday afternoon. When the TLT rises the 10 year yield on the US T Bonds drop and on Friday it hit a 2014 low of 2.38%! Mortgage rates are now close to 4% for a 30 year Fixed Mortgage. The bombings that were ordered by the President seems to have had some influence in this shocking move lower.
With Harp 2.0 starting to become available now to homeowners across the country and the state of Florida this month, mortgage volume is seeing a nice spike.
Right now it is mainly the loans held by Freddie Mac and not Fannie Mae that have the unlimited LTV’s that are the hallmark of this newest version of the HARP program. When the Fannie loans become eligible next month we should see another spike higher in loan volume. All hands on deck for the mortgage origination companies!
It was a holiday shortened day in the Mortgage Bond Market on Friday. The week was a stellar one as the stock market was hammered pretty good due to the trouble in Europe. As we get ready for HARP 2.0 this coming December, Ben B is juicing the mortgage market in a major way. Go Big or Go Home seems to be the thought process for the time being. Get your Refi on!
As we get ready for game 1 of our Thanksgiving Football Feast, the business of Detroit comes into focus. How many car commercials we see and how many US workers are happy today they have a job! It all started in Detroit!
Go Lions, derail the Packers today, I know you can.