The first rumor of "exit strategy" for the feds with the mortgage backed security purchase program surfaced today and also brought down pricing. The rumor: they will slow purchase of the mortgage backed securities to try and stretch out the benefit into 2010. SO: we may see rates come up potentially in the short term and a focus on keeping them in the 5-5.5% range for a LONGER TIME vs the 4.5-5% range for a SHORTER TIME.
If you have noticed: they are seeming to surge the rates lower and then allow them to come up slightly again. This is healthy for the market in the long term as it is creating a variety or rates during this time frame. Contrast this with an extended period of time with rates as low as they can possibly be: it eliminates the boon of refinance opportunity. A similar thing happened when zero percent auto finance was so readily available for such an extended period of time.
Rates on the 30 year fixed loans are still under 5%.
631000 people put in their initial claim for unemployment last week. (!!!) However: this is a game of expectation: the markets expected about 12,000 more claims than that.
The Dow lost 129 points...in part due to fears that the US will lose the AAA debt rating we have enjoyed since WW1. Yes: nearly 100 years of GOOD credit for the US has been good for us since other countries are MOST likely to lend us their money if we need it...and we NEED it. S&P actually considered downgrading the rating for the UK and it was disasterous for the 'pound' against other currency worldwide today. Rumors surfaced that we may see the same rating downgrade considered for us here in the USA.
Positive note: Spring has sprung in a major way! Memorial day weekend is a time to reflect on and celebrate those who have gone before us. We truly have so much to be grateful for that is completely unaffected by the turmoil on wall street or in congress right now. It is good to keep things in perspective.
Have a great eve!
