Mortgage bonds continue to fluctuate wildly as do stocks and treasuries. This, as investors adjust to a most unusual and potentially deep and prolonged recession that no one quite knows how to halt. The Fed is lowering short term interest rates and will continue to do so. Treasury Secretary Henry Paulson is proposing more regulatory control over banking ,investing, lending and the economy as a whole. Eventhough you and I (the US taxpayers) will pay for this additional regulation most experts agree it is long overdue. As an example, banks can sell mortgages but are held to a completely different set of federal and state regulations than mortgage brokers. Banks often pay kickbacks to home building companies in the form of advertising alliances, marketing alliances, and offering below market rates and terms on land lending and construction loans in order to secure exclusive rights to their consumer/retail mortgage business when selling the homes that they build. This is an egregious offense expressly stated in every state’s regulations for mortgage brokers and lenders punishable by possible permanent loss of license and possible prison time. Needless to say the National Association of Mortgage Brokers supports this additional regulation as long as it applies to all parties equally. Banks seem lukewarm to the idea.
Last week’s Personal Consumption Expenditures (PCE) and inflation numbers matched expectations and personal income rose slightly. All of which improved mortgage interest rates today. This week we will look to unemployment, jobless claims, hourly earnings and a national non-manufacturing index report for economic guidance as far as mortgage bonds are concerned.
Mr. Paulson exposed the pink elephant in the room this morning when he stated that the housing slowdown has been more pronounced and has caused more serious problems for the economy than originally expected. Housing is now probably a bit further from recovery than before his statements and represents a significant long term equity play for the patient investor/homeowner. One thing is for certain. According to the over 77,000,000 baby boomer’s retiring over the next 20 years, most of their retirement is/was equity in their home. Also, there is no long term solution currently in place for social security or Medicare, neither of which will be able to provide current levels of benefits 20 years from now. The housing market must recover and prosper or we will be in the worst recession this country has ever experienced and we will remain in a recession for a long time.
“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.