November 23, 2017

Seattle Mortgage Reel, Weekly KickOff, June 29, 2009

China has been a discussion in the media but to what degree are they investing in the United States.  

It was once thought that they were supporting the United States recovery which may be one angle.  Another view is the value of China’s Yuan (currency) compared to the U.S. dollar.  If Chinese Yuan becomes stronger to the U.S. dollar the manufacturing will reduce because of the cost of goods.  By China heavily investing in the United States bond markets and treasuries they are able to devalue their Yuan and increase the strength of the U.S. dollar.  For now this comes as a benefit to the mortgage world as rates should sustain current levels.  

Unemployment numbers due July 2nd, 2009

May reported unemployment at 9.4%, the estimates are pointing to once again a higher rate of 9.6%.  The Obama administration once said that unemployment would hit 8.00% before the turn around, it clear that if the end of the recession is truly near at the closing of summer we will top at 10%.  Will this be the final number, we all can only hope not to hear the number in the teens, more like single digits and falling by the beginning of 2010.

First half of 2009 is in the record books

As money fund managers close out their mid year books and balance sheets we are seeing interest rates moving slightly higher.  Thursday could prove to move the markets with the bad news of unemployment but it may be short lived as the market is closed on Friday in observation of Independence Day.  

Brief recap of last week’s Federal Reserve Announcements

As “Big Ben” Bernanke made his official testimony on the Federal Reserves stance on the current financial outlook, he was quoted for inflation currently being in check.  It appears that they are somewhat confident that inflation will not rear its ugly head until the first half of 2010.  With the possible first interest rate increase since June or 2006 off of the table for now all attention was on the key wording if the Federal Reserve would invest more monies into mortgage back securities.  They remained firm that the current $1.2 trillion currently pledged to purchase mortgage back securities is a financial plan that is working and in effect.  To date 50% of the $1.2 trillion has been used.  To put that into perspective Mortgages are on SALE!

Mortgages on Sale?

Yes that is correct, mortgages are on sale!  Why?  If the Federal Reserves initiative to keep mortgage rates low by heavily investing in mortgage back securities is working, and it is. Then we do have a sale going on.  BUT there is a expiration date to the coupon each home owner is holding, December 30, 2009.  Once the funds are used and if there is not future backing then mortgage will face higher yields driving rates higher.  No matter which way you put the spin on this it is a scenario we must all face.  With that said timing is key.  Prepare for future inflation by adjusting your cash flow, make it manageable to prepare for the higher costs of goods in the near future.  

Happy Independence Day!

Be safe and thankful for the opportunities that we have each day because of freedom!




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