So, here is today's market update for September 11, 2007. First of all, though, my thoughts and prayers go out to everyone who suffered in this tragedy 6 years ago!
The market was still alive and well today within Wall Street as stocks increased 180.54 to end the day at 1.38% higher. This was the apparent effect of a growing confidence of a Fed rate cut even though there were absolutely no hints in a speach given by Chairman Bernanke. Wall Street has spoken, and the verdict is in that the rate cut is almost an absolute and mandatory.
Even though this good news was sprawled throughout the press today, a report from NAR (National Association of Realtors) has made another revision to predictions for U.S. existing home sales. The adjustment was lowered to 5.92million for 2007 which is 6.48 million less than 2006's numbers. That being said, NAR did release some good news saying that the sales next year of U.S. existing home will increase 6.27 million.
Another point of good news this afternoon was the MFA Mortgage company exercising a full benefist to purchase a large portion of shares (1.65 million to be exact). This is a great show of confidence in the market today since this company is a major investor in mortgage-backed securities.
In an interesting move today, Citigroup decided to approve financing of $21.4 billion to GMAC and its subsidiaries. Gina Proia, a spokewoman for GMAC, was quoted, "Given the current market environment, bolstering our financial flexibility is a prudent measure." GMAC has reported a loss in profit of 63% in the 2nd quarter. Apparently this was all in relation to Residential Capital LLC (ResCap) and totaled about a $254 million loss due to delinquincies.
As a reaction to all the new foreclosure numbers, Tom Miller (Attorney General) has proposed and is setting up a program where homeowners are able to negotiate new loan terms through a mediator via a hotline. Now, this is currently taking place only in Iowa, but I think it would be a smart idea if other states were to model something similar and help these people out!
In other news throughout the day today, H&R Block is going to be cutting jobs in their mortgage units, and the credit turmoil is starting to spread to energy and utitlity areas. This is also another thing that Wall Street is looking at, and a big reason for the increase in the Dow today. Like I said, though...it's a good thing that investors are getting confident, but I hope we all get something out of this and we don't jump the gun on a rate cut!
My prediction for rates tomorrow based on the market and the 10 year bond is that rates will increase by about .125% overall. If you didn't lock the rate in today, hope for the best and let it ride until next week.
* IF you have any financing questions, or would like to get a Certified Pre-Approval for one of your clients please let me know, and I would be happy to help! Contact me on my cell phone at 203-257-5279, or my office line at 203-294-3009. Another good way to get a hold of me is via email at Andrew_Scherer@Countrywide.com. See you all tomorrow!
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