Shaun Carter dot Com » Real Estate

The Fed Lowers Rates a Quarter Point

Shaun Carter — Tue, 11 Dec 2007 20:56:12 +0000

Borrowing money just got a little cheaper today, emphasis on little. The markets and financial analysts were surprised to only get a 25 basis point cut in the federal funds rate. The reaction in the stock market sent the Dow Jones Industrial Average down over 220 points immediately after the announcement. A quick peek at a group of stocks’ 1 day charts showed a dramatic drop off at the Fed announcement.

While the Federal Reserve states that inflation is of concern, the markets appear to think the risk of recession is of greater concern right now. The housing market shows absolutely no sign of turning around in the foreseeable future and qualifying for a mortgage is now harder than ever as banks tighten their lending qualifications to protect themselves from additional sub-prime fallout. In my local area, home prices have always been lower than the national average and yet they are still managing to fall. A local Realtor had mentioned that homes in the area are on the market an average of at least 180 days before being sold or taken off the market.

[tags]federal reserve, interest rates, mortgage, housing, realtor, real estate, shaun carter, recession, economy, dow jones, ben bernanke[/tags]

Upcoming Fed Decision

Shaun Carter — Mon, 17 Sep 2007 01:27:48 +0000

Tuesday is the big Fed rate decision that has been playing havoc on the markets for the past few weeks. The market has pretty much priced in a 25 basis point reduction in the fed funds rate, but more and more people are thinking a 50 point reduction is possible. I’m really torn on whether Bernanke and Co. will lower rates at all, considering the economy itself is functioning at a satisfactory level and inflation is under control. The only reason to lower rates would be to provide some relief to the mortgage and credit industries to potentially save thousands of homeowners from losing their homes when their mortgage rates reset this fall. One company sure to benefit from a 50 point cut would be Countrywide Financial (CFC), which has been using more and more of its lines of credit in recent weeks in order to continue operating.

On the other hand, no cut of the rate at all could prove disastrous to the market as most everyone is expecting something. But I have to wonder why is it the Fed’s job to bail out consumers who didn’t read the fine print and mortgage companies that marketed very questionable loan products? There was a terrific commentary published in BusinessWeek recently which asks, “Dude, Where’s My Bailout?”

[tags]federal reserve, ben bernanke, shaun carter, bailout, stock market, interest rate, mortgage, loan, lending, business week, countrywide, housing[/tags]

Mortgage Applications On The Rise

Shaun Carter — Wed, 08 Aug 2007 21:25:30 +0000

A surprising turn of events in the mortgage industry was unveiled recently. The number of applications for both new mortgages and refinancing were up last week nearly 18% over the same week last year. This is in part due to mortgage rates sliding slightly and borrowers with ARM’s refinancing to a fixed rate loan.

While most of the news has been centered on the sub-prime lending practices of banks all over the country, many of these homeowners will be refinancing should rates continue to slowly tread lower. This could potentially create a new wave of business for lenders that have been battered by investors scared about record setting foreclosure rates the doom and gloom crowd are expecting just over the horizon. I for one am going to wait and see what happens, but I don’t think it will be as bad as the perennial market bears tend to lead on.

[tags]mortgage, lending, shaun carter, interest rates, foreclosure, homes, real estate, ARM, APR, fixed rate[/tags]