wall street

Making English Out Of Fed-Speak (June 2008 Edition)

June 25, 2008

The Federal Open Market Committee left the Fed Funds Rate unchanged at 2.000 percent this afternoon, as expected. In its press release, the Federal Reserve noted the co-existence of inflation and recession. On inflation, the Fed said that energy and food prices are contributing to an “elevated state” of inflation, but that it expects price […]

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The Midwest Flooding And Its Impact On Your Home Mortgage

June 20, 2008

Flooding in the Midwest has displaced thousands of families and caused billions of dollars in damages. It may also cause mortgage rates to rise. As the extent of the damage becomes more clear, prices for grain and livestock are soaring.  For example, a host of dietary staples are suddenly more expensive at the supermarket, including: Meat […]

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Looking Back And Looking Ahead : May 19, 2008

May 19, 2008

Optimism ruled the markets last week — optimism about employment, optimism about housing, and optimism about inflation. Mortgage rates edged lower overall. Despite the positive sentiment from Wall Street, consumer confidence in the economy reached a 28-year low. This is a normal divergence because investors live in the “future” of markets while Americans live in the […]

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The “Inevitable” Recession That Never Was

May 15, 2008

Retail Sales measures total receipts at stores that sell tangible “things” and — aside from weak demand for automobiles and automobile parts — Retail Sales displayed surprising strength in April. So much strength, in fact, that many experts are changing their predictions about the U.S. economy’s fate. Several months ago, most pundits declared that a economic […]

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Making English Out Of Fed-Speak (April 2008 Edition)

April 30, 2008

The Fed lowered the Fed Funds Rate by a quarter-percent to 2.000% this afternoon. Because it is tied to the Fed Funds Rate, Prime Rate also fell by a quarter-percent.  Prime Rate is now 5.000%. Holders of home equity lines of credit and credit card debt benefited from the change and will see lower interest costs in next […]

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Looking Back And Looking Ahead : April 28, 2008

April 28, 2008

Mortgage markets lost ground last week on inflation concerns and a general feeling that “the worst may be over” on Wall Street. As investors moved money into the stock market, mortgage rates ticked higher for the second straight week. The biggest story from last week was the rising cost of gasoline. Rising energy costs combined with rising […]

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How Seasonal Factors Change Homeowner Vacancy Rates

March 25, 2008

Each quarter, the Census Bureau releases the Homeowner Vacancy Rate, a housing statistic the measures the percentage of homes for sale that are vacant. A home listed for sale may be vacant for several reasons including: The home has been foreclosed and the owner has moved out The home seller moved into a new home […]

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Making English Out Of Fed-Speak (March 2008 Edition)

March 19, 2008

The Fed lowered the Fed Funds Rate by 0.750% to 2.250% yesterday. Because it is tied to the Fed Funds Rate, Prime Rate also fell by 0.750% yesterday.  Prime Rate is now to 5.250%. Holders of home equity lines of credit and credit card debt benefited from the change and will see lower interest costs in […]

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As The Fed Funds Rate Falls, 30-Year Fixed Mortgages Rise

February 28, 2008

Federal Reserve Chairman Ben Bernanke testified to Congress Wednesday, alluded to further rate cuts to support an ailing U.S. economy. Already, the Federal Reserve has lowered the Fed Funds Rate by 2.250% since September 2007. The graph at right comes from the Wall Street Journal and it highlights a very important correlation between the Fed […]

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How Economic Stimulus Impacts Home Financing

February 13, 2008

President Bush is expected to sign the economic stimulus package today. The package includes tax rebates and incentives for business and its purpose is to jumpstart a stalling U.S. economy. If the package is deemed “effective” by Wall Street investors, we should expect the stock market to rally on the prospects of business growth. The […]

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Making English Out Of Fed-Speak (January 2008 Edition)

January 31, 2008

The Fed lowered the Fed Funds Rate by 0.500% to 3.000% yesterday.  The move was widely anticipated and so Wall Street’s reaction was muted. Because it is tied to the Fed Funds Rate, Prime Rate also fell by 0.500% yesterday.  Holders of home equity lines of credit and credit card debt benefited from the change […]

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How The Stock Market Rally Was Terrible For Mortgage Rates

January 24, 2008

The Dow Jones Industrial Average surged 631.86 points in the last three hours of trading yesterday as traders piled into equities. Fueling the rally?  The bond market. For as much as stocks gained today, bonds lost.  Including mortgage bonds.  The dramatic sell-off created a huge swing in mortgage rates and erased nearly all of 2008’s rate improvements. […]

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What The Bank of America-Countrywide Merger DOESN’T Mean For Homeowners

January 15, 2008

For all that’s been said about the proposed Bank of America-Countrywide merger, what’s not getting talked about is how the merger will impact existing Countrywide customers. The short answer is that it won’t. A mortgage (and its corresponding note) is a legal contract between the lender and the lendee, signed on the date of closing. […]

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$100 Oil Could Mean More Than High Gas Prices For Americans

January 3, 2008

The price of oil briefly touched $100 per barrel yesterday, just short of the all-time inflation-adjusted high of $102.81 in April 1980. According to economic forecasting firm Global Insight, each $10-per-barrel increase in oil prices: Increases gas prices by 19 per gallon Cuts consumer spending by one-third of a percent Reduces employment by 100,000 Adds […]

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Holiday Spending APPEARS To Be Lower, But It Isn’t Really Lower

December 26, 2007

During the Holiday Season, economists watch consumer spending intently because it makes up two-thirds of the U.S. economy. When spending is stronger-than-expected, it can lead to inflation which pushes mortgage rates higher. So far this season, mortgage shoppers should be in good spirits.  Sales have fallen four weeks in a row and the outlook for a late-December rally […]

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Making English Out Of Fed-Speak (December 2007 Edition)

December 12, 2007

The Fed lowered the Fed Funds Rate by 0.250%.  The rate decrease was not well-received, though, as many investors were calling for a deeper cut of a half-percent. In response, dollars moved from stock markets to bond markets and, therefore, mortgage rates fell. Because it is tied to the Fed Funds Rate, Prime Rate fell by […]

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Mortgage Rate Relief Plan: Who Qualifies For Help?

December 7, 2007

Thursday, the White House revealed its HOPE NOW program, aiming to help sub-prime borrowers freeze their initial “teaser” rates for a period of five years. The program is receiving a lot of ink in the newspaper dailies but sometimes it’s unclear exactly what the program offers, and to whom. Let’s look at the details and […]

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Why You Should Remain In “Ready Position” For Your Mortgage Rate

November 28, 2007

Easy come, easy go. There was a strong rally Monday afternoon in the mortgage bond market.  It was sudden and furious, mostly coming on in the last 60 minutes of trading. When markets closed, mortgage rates for conforming home loans were grazing their lowest levels in nearly two years. It lasted overnight and into the […]

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The Week In Review (November 05, 2007) : What To Watch For

November 4, 2007

As we saw last week, the economy is simultaneously hot and cold.  This makes for a strange ride on Wall Street because stocks and bonds tend to move on emotion rather than on fact. This “mob mentality” is one reason why mortgage rates have bounced up and down so much lately. For example, we saw […]

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Monthly Reiteration: Real Estate Is Not A National News Story

October 25, 2007

The Wall Street Journal used a lot of ink this morning on September’s Existing Home Sales data, including the chart below.  It’s frightening to the lay person who may not know how to interpret data like this. Remember: real estate is local. Yes, on a national level the number of homes for sale in increasing […]

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