This prompted heavy selling especially from MORTGAGE players prompted benchmark rates to post their biggest one-day spike in yield in about three years. The yield climbed over 5.00% which hasn't been at this level since July of last year.
What the market is failing to understand is that these countries DO NOT have the same market status as we do. Our inlation rate is relatively low, what inflation we do have is based upon the higher price of gas, and our housing market is very fragile (currently a big drag on GDP).
If the Fed does not step in and speak to the fact that global markets do not impact our economy. Then we (real estate and mortgage professional) will be forced to deal with one on the largest downturns in home prices since the depression.
This is not doomsday, yet. The market of real estate has had to endure some very terrible things thus far this year. There are record foreclosures on the market, mostly due to liar loans (neg am), investment schemes, and stated income loans. Then the subprime mortgage sector underwent a complete overhaul in which more than 80 lenders were forced to shut their doors. And prices have only fallen a mere 2% nationally.
Now, we have interest rate concerns to deal with. Rates on average will be above 6.50%. When just a month ago (when the market was picking back up) they were around 6.00%. That's a $200 difference on a $300,000 home. Can you guess what the consumer is going to do? That's right, they will offer less for the home to achieve the same payment.
We should be questioning the Fed under some bright lights like criminals. Why have you paused 18+ times in a row while housing inventories climbed? Why did you sit on your hands when these liar loans (neg am) hit a record for originations? How do you get these positive employment figures while large plants and grocery chains close, and even more jobs are shipped overseas? Who do you really work for?
Granted we may not like the response and the truth may only make matters worse.
Now we all want to know how do you survive in this new market. The answer.............Advertising.
We can advertise that interest rates are climbing and acting now may save you thousands. We can advertise that we have not done any of these liar loans, that we care about our clients' futures. We can advertise our expertise, and how we can find them a good deals in this market.