Mortgage Rates- The week in review

Mortgage and Lending with Chase


What is striking me between the eyes as we dive into yet another week of potential financial surprises is that, somewhere in the recent past, I assured my readers (or reader, as the case may be) that further declines for interest rates did not seem at all likely. Nice guess, Bozo.

The 10-year Treasury note began the week last week at 3.663% and ended the week at a mouth-watering 3.420%. The only trouble is that it nearly took a complete rout in the stock market to get the T-note to such a lovely level.

My concern strays a bit from the numbers here, though. Consider what we've been through. The recession fouled the name and reputation of mortgage loan officers. (Yes, I do tire of the blame being heaped on the wrong parties for the financial fiasco, but it will take some time to regain the trust of the public, which was always a bit iffy in any case.) But we are not alone here. Bankers, those dignified, sedate bastions of financial security and wisdom, have caused themselves to be looked upon as criminally negligent. So have many others, not least those in our government.

So let's say you have some money to invest. Where do you go? Whom do you trust? A guy comes to you and says he has an extremely promising deal built upon the back of virtual CDOs and strongly suggests you put as much as you can into it, and you do, and you lose a fortune, and you later learn that you were being sold an investment instrument that was apparently designed to crash and burn by the very people who sold it to you.

I don't bring this up just to rag on the people who allegedly did this thing. We can spend weeks fuming about the Bernie Madoffs and all the others who walked away with billions of their fellow investors' dollars, in many cases "legally."

A problem here is that we are enduring a financial market that has no certainty, that turns on a dime from one day to the next, depending on the Big News du jour. (Only by looking at longer-term indicators like the April employment report do we get a sense that there is indeed an underlying direction and movement to this recovery.)

And the bigger problem, the one that will keep showing up with a demonic smile on its face, breaking up every party we manage to get going in the markets, is that we've lost the essential element of trust. Without trust, we cannot have workable markets. Without being able to trust your stockbroker, you don't have stock markets. Without being able to trust your banker, your money is no longer safe. Without being able to trust your mortgage loan officer, it's impossible to arrange financing you can be confident in. Without being able to trust your real estate professional, you might as well simply buy your house over the Internet, but you won't have any assurance that it's a good deal, that you made the right choice, that the house will serve you long after your kids have left the nest.

I don't like talking about this, but it's an unavoidable subject. The money game can only unravel if we don't find ways to rebuild trust, transparency, honesty, and certainty.

Meantime, the markets will probably calm themselves a bit this week, leading to the mistaken impression that all is well again. Then the Trojan Horse, now wearing Greek rags, will find its way again past our flimsy walls...and one of these times, I just don't know if we can avoid a panic that will set the recovery back severely. Yes, I'm very, very angry. Bet you are, too.

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