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Washington DC Activity Affecting Economy and Mortgage Rates

By
Mortgage and Lending with Signet Mortgage

Happy Thanksgiving and I hope your short week is productive and then filled with warm family memories.  Here are some of the key actions we are watching:

  • Washington activity continues to dominate the economic landscape.  The Treasury, Fed and FDIC decided late last night to further back CITI with a lifeline of $306B on their debt and an injection of $20B. In exchange, US Taxpayer/investors are receiving $27B in preferred stock paying an 8% dividend. We are hopeful this one is a good investment.
  • Obama selects Geithner from the NY Fed as Treasury Sec’y. This appears positive and has been well received on Wall St.  If anything, he may be predisposed to swinging the re-regulation pendulum too far left.  We’ll keep our eye on that. Summers and Orszag are also selected for the White House economic team now.
  • Another $700B stimulus package is likely with broad market spending rather than financial institution stabilization.  Watch for this by 12/6.
  • Big 3 automakers are retooling their plan for using further taxpayer investment –corporate jets (4 of 1bout 10 are now for sale) and a Brazilian plant expansion have been very distracting
  • The SBA changed an important guideline this week, allowing lenders to base SBA loans off of LIBOR instead of the Prime Rate.  We are excited that this should really loosen that segment of lending by the end of the year.
  • On Wall Street, the bears continue to rage. Though the bounce back on Friday gave some comfort, the pundits are looking for a bottom not yet seen. 
  • Oil started this morning below $50/bbl!
  • National existing home sales reported a drop of 3% this morning, below 5M units per year, pushing the nationwide inventory to >10 mos. National median home prices are off 11.3% from a year ago.  In the West, the unit sales numbers are down less compared to last month and median prices are off fully 27% from a year ago giving hope that the West is closer to the bottom.
  • Mortgage rates are still very good, lower than they were at this time last year and technical indicators are positive. The investor demand for mortgage backed securities is just at a medium level right now and still we have good rates, so a return of investor confidence will mark an improvement in the rates.

 

We’ll keep you posted and you keep helping people reach their dreams.   Make it a great week  – Dave

 

P.S. – in these challenging times – now more than ever – friends, family and clients are looking for quality advice.   Let me know how I can be of help. 

 

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