ArchivesA US default could be disastrous, most likely causing a bear market in stocks, as well as a possible interruption in Medicare payments and Social Security checks. Bonds would also suffer large losses. A worse case scenario, to be sure.
Reality will most likely be far less severe. I'm guessing, hoping really, that cooler heads do prevail and the political game of chicken is ended.
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( 3 / 885 )The Conventional 30 year fixed rate slid to 4.25% by weeks end. This rate would be available for a borrower who has excellent credit and could be obtained with little or no points if you make the right size of down payment.
The Conventional 15 year fixed rate remained at 3.375%, assuming the same parameters as mentioned above.
SHOULD I LOCK OR FLOAT?
Unless you are going to closing and you have to lock your rate, I feel that it is ok to float your rate. There will be some volatility so don't put your blinders on and ignore the market, but overall the risk should be outwieghed by the reward. Let it ride!
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( 3.1 / 2048 )I came across an article from mid-August that discussed federal payroll data and the economy and found it interesting. Jim Paulsen of Wells Capital Management felt that the economy was improving slowly (plod along was the term he used). He pointed out that Housing numbers were strong and the Manufacturing Sector was starting to recover, stating, "If you get manufacturing back with housing already doing better, we're going to feel that in the economy including jobs in the latter half of this year." His argument was that if the economy was growing, then that growth was more important than one or two monthly jobs reports.
I partially agree with his premise, because housing has been driving the economy and creating new jobs. I'm not sure i agree that the economy is improving, because I don't really see it. My view is limited, but I'm not seeing much hiring from businesses, very small start-ups are few and far between, and local banks are very particular with their business loans.
If The September jobs figures are strong, I might change my opinion. Unfortunately, as you know, that report won't be released tomorrow due to The Shutdown. It appears that other important economic reports will also be delayed, even after The Sutdown is resolved.
Paulsen may be right, but we will have to wait a little longer to find out.
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( 3 / 2202 )On day 2 of The Shutdown, we are already seeing lenders delaying mortgage loan closings due to the inability to verify tax returns and social security numbers through the federal governement. This is no big surprise.
The big surprise will be the September Jobs Report, which will most likely not be released due to The Shutdown. This is a huge indicator of which direction the FOMC will take regarding monetary policy (Tapering). A bad number would indicate that the economy is far from robust, many already believe that to be the case, and would provide the FOMC with more ammunition to leave Tapering in place.
A bad number would negatively impact the capital markets, which remain open and trading as usual, so no number may ultimately be good for stocks. We shall see.
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( 3 / 1232 )Well, the Federal Government is shutdown, except for essential employees, like some TSA people. I'm happy that our politicians are smart enough to keep protecting the airways, even if they aren't smart enough to figure out a sound solution.
The problem with the shutdown is that the housing industry, which has been one of the few bright spots in the economy, will be negatively impacted greatly. This is because mortgages can be processed, but they won't be allowed to go to closing due to the inability to process flood insurance and the IRS 4506T form (see yestereday's post), among other items.
The worst part for borrowers is that they may lose their interest rate locks if they can't close. Some lenders may extend these rate locks free of charge, but many will impose their normal extension fees because the need for the extension wasn't caused by the lender.
I'm frustrated with the shutdown because, as with many government situations, it's the person that they are supposedly protecting that loses. That person is the American citizen, the consumer.
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