Mortgage Market Update

Well, we’re less than an hour into the markets today and it’s time to take a look at what’s happening…..

• So far, rates are staying quite steady.    Not a lot of news going on so far this morning.
• Dubai got a “bandaid bailout” to keep them from totally drowning, but from what I hear, they have approximately $35 Billion in loans that need to be refinanced in the near term with virtually no one wanting to loan them money.
• Exxon/Mobil is buying another energy company with part of your and my hard earned money.
• The President is going to slap the hands of a bunch of Wall Street execs.   Does anyone expect that it will really make a difference?   Anyone?   Speak up if you do…..

So, rates are steady for now.    As I said earlier, it could be a very volatile week, but I don’t expect any significant changes in the overall direction of the markets.

Stay tuned and keep in touch.

 

Tom Vanderwell

Jobs Jobs Jobs? How about another idea?

Here’s an idea…..

Rather than spending $500 Billion on another stimulus bill that doesn’t do what it says it will or spends 7 Figures to create $50,000 a year jobs (with about a 20 year payback time), let’s try something radical…..

LET’S CUT TAXES!

ALL OF THEM!

BY A LARGE AMOUNT!

What do you think that would do to the economy?   If suddenly everyone had an extra 10% in their paychecks?  

Oh wait, we tried that before, back in the 1980’s.    Oh wait, it actually increased tax revenues.   Oh and it actually turned the economy around.

Okay, enough for tonight…..

Tom Vanderwell

Calculated Risk: The Next Stimulus: “Jobs, jobs, jobs, jobs”

From the WaPo: House shifts focus to ‘jobs, jobs, jobs, jobs’

“It’s jobs, jobs, jobs, jobs,” Rep. John B. Larson (D-Conn.) … said … “Members of this caucus feel … that a jobless recovery is just simply unacceptable to us.”

And Reuters list some possible items “under consideration”: U.S. House plans jobs bill before year end

* A transportation bill that could cost up to $500 billion

* A tax credit for businesses that create jobs

* Assistance to state governments …

* Low-interest loans for small businesses

* Another extension of unemployment benefits …

* An extension of health-insurance subsidies for the jobless

* A transaction tax on over-the-counter trades in unregulated “dark markets”

Technorati Tags: Tax Cuts, Tom Vanderwell

How does it work being in Michigan and doing mortgages in 35 states?

Doing Mortgages In Other States

Mortgage Market Week in Review

Well, it’s time to take an overview look at what’s been happening in the mortgage and finance markets this week.   It’s been a strange week.    Let me explain:

• It was a relatively quiet week.   I heard one analyst on CNBC describe it this way:  “All the traders are back in the office but most of them haven’t had enough coffee yet and are so exhausted from spending vacation in the Hamptons” and aren’t working real hard.  Part of that quiet was also due to a lack of major news in the economy.
• The economic results were decidedly mixed.   Consumer confidence was good, the Fed’s Beige Book report was varying between lukewarm and cool depending on the region. 
• Geithner testified before a House committee that the worst was over and we were definitely going to have to start withdrawing some of the “life support” (my phrase) that we (you and me) have extended to the financial markets.    Withdrawing that support is going to eventually make money more expensive.   The law of supply and demand says that they flooded the market with supply and that lowered the cost.   Now, if they withdraw the support, that’s going to raise the price of money.   The price of money?  The interest rates.
• Trulia (www.trulia.com) announced that in the last month, sellers had knocked $28,500,000,000 (that’s billion) off the asking price of the real estate listed on Trulia.   The average drop was approximately 10%.
• The Treasury held an auction of 30 year money and LOTS of people came to the party.  The rate didn’t change much from past but the volume of buyers surprised a lot of people.
• The value of the dollar plunged and gold climbed to above $1,000 per ounce.   

So what sort of reaction would you expect the markets to have?   I’d have to say I’d probably expect the results to be decidedly mixed.    A lot of movement but not a lot of real change.

Wrong! 

This can probably be described as a week where people bought everything.   The news is bad – buy stocks and buy bonds.   The news is mediocre – buy stocks and buy bonds.   The news is good – buy stocks and buy bonds.  

This is not the way it normally works.   Normally the money flows with the news.   The news is good – the money flows into the stock market (and out of the bond market).  That means that stock prices would go up and bond prices would go down pushing rates up..   The news is bad – the money flows out of the stock market and into the bond market -stock prices fall and bond prices go up pushing rates down.   The news is really really bad – the money goes into the mattress and stock prices fall, bond prices go down and rates go up.

So why are we in a situation where stock prices went up and bond prices went up?   I think it’s a couple of factors:

• As people feel the economy is inching back from the “brink of the abyss,” they are starting to look at what’s in their retirement and investment portfolios and finding out that they have taken a beating.   So they are trying to be more aggressive and trying to “catch up” quickly.
• There is an ongoing debate on Wall Street and elsewhere regarding whether the worst is really over and how bad the rest is going to be.    The camp that believes the worst is over is buying stocks.   The camp that believes we aren’t out of this yet is buying bonds because of the relative safety of them.

So what does it mean for mortgage rates?   A couple of things:

• Rates have dropped a little bit this week.  I’ll send an update with the current rates as soon as I’ve got them on Monday.
• The trend has been inching downward all week.

There are some significant questions regarding both the short term and long term prognosis for rates:

• What’s going to break rates out of this cycle of drifting slowly downward?  (short term) – Possible Answer – some really decisive economic reports either to the good or the bad.
• What’s going to be the decisive influencing factors that would break things out of the cycle that they are in?  (long term) – Probable Answer – the impact of the removal of the government stimulus efforts on the economy.   What is the housing market going to look like without the 1st time buyer subsidy?  What’s the commercial debt market going to look like when prime doubles from it’s current level?   What are the mortgage backed securities and Treasury markets going to look like when Uncle Sam isn’t buying billions and billions of them?   The overall trend is going to be higher.

Therefore, my recommendation for mortgage rates hinges on when you need the money:

If you are closing within 2 weeks – my recommendation is lock in the gains we’ve seen and grab them now.

If you are 2 to 4 weeks away – the aggressive ones could cautiously float.   Otherwise I’d recommend locking.   If you float, keep very close tabs on the market.

If you are more than 4 weeks out from closing – I’d recommend cautiously floating.   You’ve got some time and my take is that we’re more likely to see market moving economic reports to the negative than we are positive.

I’ll continue to keep you informed.   Let me know what I can do to be of help.

Thanks!

 

Tom Vanderwell

Why does a Federal Reserve Exit Strategy matter to the Housing Market?

You might think that it’s quite an esoteric and ethereal (how are those for big words) discussion, but there is some pretty substantial reasons why it matters to the housing market.

Check out what I wrote over at my other project, “Straight Talk – The Bigger Picture,” for some thoughts on how the Fed matters to the housing market.

Then call me at (616) 209-8811 and let’s talk about it.

Tom Vanderwell

The Fed, Exit Strategy, Tom Vanderwell, Housing

Traveling and other things…..

Hi all,

I wanted to tell you that postings will be a bit lighter than normal for a while.   Later this morning my wife and I are leaving cold and snowy West Michigan and traveling to cold and snowy Rochester Minnesota to consult with the doctors at Mayo Clinic.  I’ve got what appears to be a pinched nerve in my neck that has made the last few months quite uncomfortable.   The doctors here in Grand Rapids believe they know what it is, they just don’t know how to deal with it.

I’m assuming that I’ll have some times to write about what’s going on in the mortgage world, but I have no idea how much time or computer access I’ll have.  For those of you who know me well, you know I love to “play” on my blackberry, so if you want to keep in touch, either follow me on Twitter or become my friend on Facebook.

I’ve scheduled some posts to show up already and I’ll write more as I can.

This is something that I’ve dealt with before (last time was 22 years ago) so we kind of know what we’re dealing with and expect it to be more of a speed bump in the road than anything else.   It helps to know that God has a plan when we don’t.  Takes a lot of the worry out of it!

Take care and keep in touch and I’ll do the same!

Tom Vanderwell

Day 5 of Vacation

I thought I’d take a few minutes away from vacation and check in with you all.   A couple of quick thoughts:

1. It’s currently about 30 degrees warmer in San Diego than it is in Grand Rapids Michigan.

2. This afternoon, driving through LA, it was 76 and sunny.

3. The family and I are having a great time and from the little reading I’ve done, it sounds like the markets haven’t totally blown up.

I’ll write more again when I have time.   Enjoy the week, enjoy the New Years holiday!

Tom

I’m back!

After a day where an 8:30, 9:15, 11:30 and 2:00 also added in a 1:00, 3:30 and 4:00, I had absolutely no time to write about what’s happening today.

I’ll get some thoughts out tonight and more tomorrow.   If you have anything you’d really like to know about, click on “contact me” and let me know.

Tom Vanderwell

Government sells T-bills at 0% – MarketWatch

NEW YORK (MarketWatch) — Treasurys headed higher Tuesday, helped by a strong bill auction that showed investors purely wanted assurance that they would get their principal back.

The market reached the highs of the day after the Treasury Department sold $32 billion in four-week bills at a yield of 0%.

Treasurys up; government sells T-bills at 0% – MarketWatch.

Let me make sure that you understand this.   Investors just took $32 Billion and said we’ll give it to the US Treasury until the second week of January and for the privilege of making sure we don’t lose our money, we don’t even want to earn any interest on it.

That’s a sign that not all is well in the financial world right now.

Tom Vanderwell

Meditations on a Sour Economy

This article appeared in The Holland Sentinel (a local paper) over Thanksgiving weekend and I thought it was worthwhile repeating.  The author is the former president of Hope College, a local private college (and a rival to my alma mater).  Read the entire thing, but here’s some “highlights….”

As I write this commentary, it appears that we are entering times comparable to the Great Depression…..

So what can I offer in this brief article? I have simply posed five questions, added a few thoughts, all with the hope that these may be helpful to individuals, families or other groups as they seek to thoughtfully and creatively reflect on the times in which they live and their personal situations.

In these times of economic uncertainty, what are the key things that I/we cannot control?

What are some things that I/we can control?

Thought: Most of the things we cannot control are external.  The things we can control rise out of who we are at the very center of our being, our character and the narrative, values and priorities of our lives.

What can I/we give up, do without or change that will enhance the overall situation without diminishing the basic qualities of the life to which I/we aspire?

Thought: I tend to buy the books I want to read. During the Depression there were two libraries we used extensively: the public library and our church library. We never wanted for books to read.

Is this the time for me/us to show deeper gratitude for the things that I/we do have?   What might these things be?   In what creative ways can we express our gratitude?

Thought: One memory I have of the Depression years is the generosity of people who had very limited resources. There was always someone in greater need.

Is this the time to start a new endeavor or venture? Go back to school; take piano lessons; start a business?

Is this the time to think more deeply about the foundation or basic direction of my/our lives?

Thought from C.S. Lewis: “God whispers to us in our pleasures, speaks to us in our conscience, but shouts to us in our pain.”

Final thought: The technology, culture and social values of these days are quite different from the era of the Great Depression, but the deeper dimensions of what it means to be human have changed little.

Many options are open to us; the choices we make are important.

Tom here again – I just want to throw a couple of thoughts on top of what Gordon VanWylen offered:

• Those of us who have the privilege of working and interacting in a Web 2.0 world are blessed with relationships and opportunities that we wouldn’t have had otherwise.
• We also have the ability to see the struggles that others are facing and know that we aren’t alone in our battle with the struggling markets.
• It’s important that we be optimistic and use the gifts that we’ve been given well.

I hope you find this thought provoking.   I know I did.

Tom Vanderwell

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