Is the Fed's Plan Having a Positive Impact ?
March 27, 2008
The months of February and March 2008 will go down in history for the actions taken by the Federal Reserve Board to alleviate the credit crunch in financial markets. With the downturn in housing sales and the subsequent necessary write offs of investor's losses, the Fed acted in a remarkably unusual fashion. The question is "What impact are all these "fixes" having on the real estate marketplace?"
According to the Mortgage Bankers Association, mortgage application volume rose 48.1% last week following the Fed's move to cut two short - term interest rates. The MBA reported a seasonally adjusted 82.2% spike in the index that tracks refinance applications, followed by a 10.6% gain in the purchase-loan index.
While mortgage purchase applications have increased in the last few weeks, they are still below where they were at this time last year - and 2007 was not equal to applications in 2006.
The good news for potential buyers, and sellers also, is that mortgage monies continue to be available at reasonable interest rates 6% - 5.75% for 30 year fixed. It seems to me that the other good news is that when this particular downturn is over, there will be more disclosure and more understanding of the selling of mortgage backed securities (MBS).
The past several months have been a crash course in macro economics and a true eye opener about the global impact that the U.S. housing market now has in ways perhaps never before seen.
The months of February and March 2008 will go down in history for the actions taken by the Federal Reserve Board to alleviate the credit crunch in financial markets. With the downturn in housing sales and the subsequent necessary write offs of investor's losses, the Fed acted in a remarkably unusual fashion. The question is "What impact are all these "fixes" having on the real estate marketplace?"
According to the Mortgage Bankers Association, mortgage application volume rose 48.1% last week following the Fed's move to cut two short - term interest rates. The MBA reported a seasonally adjusted 82.2% spike in the index that tracks refinance applications, followed by a 10.6% gain in the purchase-loan index.
While mortgage purchase applications have increased in the last few weeks, they are still below where they were at this time last year - and 2007 was not equal to applications in 2006.
The good news for potential buyers, and sellers also, is that mortgage monies continue to be available at reasonable interest rates 6% - 5.75% for 30 year fixed. It seems to me that the other good news is that when this particular downturn is over, there will be more disclosure and more understanding of the selling of mortgage backed securities (MBS).
The past several months have been a crash course in macro economics and a true eye opener about the global impact that the U.S. housing market now has in ways perhaps never before seen.
posted by shirley harry at 8:59 AM
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