Housing News----Normally Thanksgiving week is a slow news period. Not this year though - before the government and markets shut down for the holiday last week Treasury Secretary Henry Paulson said the Federal Reserve Bank would buy $100 billion of debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks and $500 billion of mortgage securities backed by Fannie, Freddie and Ginnie Mae. This $600 billion package is very significant for the real estate industry because it is expected to cut the cost of mortgage financing for both individuals and businesses.
Weekly Review---The week began with the news that GDP fell 0.5% in the third quarter - not the 0.3% that the Commerce Department first projected. The revised GDP showed a larger drop in consumer and business spending. In Q2, GDP was 2.8%.
The $600 billion housing finance facility, though, cheered the market. The government also said it would set up a $200 billion facility that will support student, auto and credit card loans and loans backed by the US Small Business Administration. The point is to free up credit for consumers, hopefully in time for the holiday season.
7 Day Forecast--- Look for mortgage rates to continue to drop this week as the plan to buy Fannie Mae and Freddie Mac debt and security obligations gets underway. Also, there will be a lot of analysis about the retail sales on the day after Thanksgiving. The amount that consumers spend on that day - called Black Friday because it moves retailers from the red to the black - is an important measure of the economy. So far it looks like the crowds were healthy but spending lighter than in previous years.
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