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October 8, 2008

Mortgage Market Week in Review – on a Wednesday?

by

Mortgage Officer

Author website

Yeah, I know it’s only Wednesday, but when I looked at my schedule for the rest of the week, I realized that I wasn’t going to be in one place long enough or have the time to sit down and write this update, so I decided that I better do it today.    In addition to that, we’ve had plenty of news in the last couple of days.   So, here are some thoughts about the markets, the housing market, perception and reality.

The markets – I think that it’s safe to say that none of us have seen this type of stock market declines in our lives.   I wanted to bring up a couple of points about the markets:

1. It’s very important, when looking at long term investing, to keep a rational view of things.   If you aren’t going to need the money for 25 years, don’t make decisions based on fear and panic that is currently swirling around in the markets.  Look at the long term and make decisions for the long term.

2. Stop listening to the main stream media.   There are many things where they don’t know what they are talking about and they love to paint a darker and more scary picture because it helps ratings.   I was listening to a local AM radio talk show yesterday while driving between appointments and was struck by a couple of things:

a. Morning talk show hosts shouldn’t be giving out advice about FDIC insurance.   The facts as they were stating them were just plain wrong.

b. Someone who is 44 years old (they said so) called in and said that on Monday (one of the lowest points in the market in the last 5 years) he sold everything in his 401K plan and moved it to cash.   If I had the time, I would have called in and told them a thing or two.   I was shocked at how much fear is taking over for rational long term planning.

3. I’m 43 (yeah I know, I’m over the hill) and I want to answer the question a lot of people are Read more

October 3, 2008

Mortgage Market Week in Review

by

Mortgage Officer

Author website

Well, here we are on Friday again. Are you getting motion sickness from all of the news and rumors that are flying back and forth? Wow has it been another week to forget, hasn’t it?

Here are the topics we’re going to talk about today: The Bailout/Rescue Plan, some very weak economic reports, the credit markets and do bankers really trust each other?

First, there were several economic reports that came out. None of them were good. Here’s a rundown of them:

1. Jobs – the jobs report came out this morning and showed that 159,000 jobs were lost in September. While the number was lower than what the markets expected (they expected 200,000), it was a very weak report.

2. Factory orders came in down 4%. That’s not the direction we’d like them to go.

3. Car Sales fell off a cliff in September. Ford’s sales dropped 35%. Ouch.

4. A couple of reports on personal incomes, personal expenditures and the like came out and they weren’t good.

If these were the only issues that we had, we’d have our hands full and we’d see mortgage rates drop due to the increased weakness in the economy.

But that’s not all. The credit markets have taken a major hit in the last week. What’s happening with that? A couple of brief highlights:

1. Banks are very concerned about running out of money (capital). Wachovia (more on this later) and Washington Mutual have been “bought out” to keep them from going under. Other banks are concerned that the losses they are experiencing will not enable them to keep their capital ratios where they should be. Due to that, there is an increasing reluctance to lend to commercial customers and to lend to consumers. How bad is it? I’ve heard a variety of conflicting reports. What I can say from personal experience is that for people (consumers, not businesses) who have the following: 1) Some equity in the Read more

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