Well, as you have seen, the mortgage industry has been bounced around and battered almost as severly as investment firms and investments in general the past couple of weeks.
The big news in mortgages right now is rates!
Last week alone rates for the most popular programs, 30 year fixed, 15 year fixed and 5-1 ARMs rose nearly .500% from the previous week. It was the biggest one week rise in rates in over 20 years.
Some say it is a result of the $700 billion government bailout. Banks are reluctant to open their wallets due to uncertainty about what to lend and who to lend to. The government's $100 billion investment in 9 of the countries largest and strongest banks may help loosen up credit. The theory is that with improved capital positions, banks should be able to increase lending activity immediately. We shall see!
As far as blue skies or rays of sunshine breaking through the dark clouds, watch billionaire investor Warren Buffett. He is buying US stocks with his own money right now! His major purchases have been Wells Fargo, Goldman Sachs, US Bank and Sun Trust. Buffett has always subscribed to the theory of "buy low and sell high". He seems to think that stocks right now are a bargain and there is much upside for very profitable appreciation over the next 10 years.
With the bank investments, his theory seems to be that if banks don't lend they don't make money. Perhaps he sees more open lending policies on the horizon.
Monday, October 20, 2008
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