Housing News

Economic Stimulus Package, lower mortgage rates, financial headline

Travis NelitonWe welcome Travis Neliton onboard as one of our new Guest Bloggers!

Interesting times but we all knew that right? 4 major headlines to talk about. First, the US Senate and House of Representatives agreed to the final terms of the new $789 billion economic stimulus package. What is interesting was that the “market” or traders had already anticipated this passing when the terrible jobs numbers came out last week and there was a rally last week because of it! Well it is kind of like the day after Christmas, the gift has come and gone and then when more uncertainty hits, it erases all the gains or “gift” it rallied on last week. So much of the market’s reaction is based on emotion, not logic, so we have interesting times ahead still.

Next was new Treasury Secretary Geithner’s public speech that crashed and burned among financial news media. Sec. Geithner’s speech had been highly anticipated and the market end the week last week with very slow trading as they patiently awaited the scheduled speech on Monday. Then the speech had been delayed by a day, already making nervous traders anxious and worried about the US Treasury new TARP II plan (Troubled Assets Relief Program) or the Fed’s “Bad Bank” as it has been coined.

There wasn’t a lot of clarity in Sec Geithner’s speech as his words did raise more concern if the plan will realistically help the financial sector and the big private banks. Sec. Geithner dropped things like “stress tests” for banks requesting to use the program, guarantees that they will negotiate and help homeowners facing foreclosure, cap executive bonuses with “claw back” provisions and so on.

Third was Fed Chairman Bernanke address to the House Finance Committee where he was followed on the hot seat by Sec Geithner addressing the Senate Finance Committee. After watching both, I would hate to be in their shoes right now.

Finally, watching the CEO’s of 8 major financial institution get grilled by the House Finance Committee was the culmination of events of the past few days. Oil closed down a few dollars again at $35.94, the DOW closed in the black barely at +50, and the US Treasury’s record $21 Billion 10-yr note auction went so-so, causing the 10-yr note to improve by 41 basis points to add to the 109 basis points from yesterday. Long range mortgage backed securities closed flat at 0 after 2 days of great gains, all good news for long range bonds and mortgage rates. We do have some ceilings of resistance above bond pricing to try and keep pressure on mortgage rates from going on a huge positive rally. Things look good though and we should start seeing 30-yr fixed mortgages back in the upper 4% range as the supply and demand issue starts to ease.

For now I would take the stance of floating on your mortgage rates until you are coming close to having to close your loan.

Travis Neliton, CMPS, GMA

As a Certified Mortgage Planner, it gives me the privilege to help families build wealth for the future as well as continue an ongoing relationship where I become their trusted advisor and debt manager. I am happy to apply my experiences and keen sense of detail to crafting creative solutions to the financial needs of my clients. Currently I am managing over $82 million in mortgages for my clients and constantly strategizing with market trends and opportunities for my clients to create more wealth and stay debt free.

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