Further corporate losses forecast for this week along with high oil prices and the poorest retail sales season in the past five years have economists beating the recession drum loudly. Merrill Lynch is expected to report a $15 billion dollar loss this week due to sub-prime mortgage exposure. Also, Bank of America announced last week that it will buy Countrywide Financial for $4 billion dollars.
We do not believe this is the end of the sub-prime mortgage fallout. And we are not certain of the positive effects Bank of America’s purchase will have on either company, the mortgage markets or the economy at this time. We, along with many investors and economists, will wait and see if the Fed’s rate cut and the President’s economic stimulus package can offset high energy prices and continued corporate losses and jump-start economic growth.
This week should provide more insight into the next what the next two quarters hold for our economy. Two Fed Governors will be speaking this week. Also, this is the first full week of economic reports for the new year. Housing starts, housing permits, consumer pricing and producer pricing, retail sales, and consumer sentiment are some of the reports that we will be watching closely as they have a greater affect on mortgage interest rates.
Even though housing inventories remain high, we see appreciable buying opportunities in may areas of the country.
“Mortgage Lending is Our Business; Customer Service is Our Passion.”
Stay tuned and stay in touch with your mortgage professional. Thank you for the opportunity to serve you and your clients. David. 919.851.0999
