government assistance mortgage

The Week In Review (March 5, 2007) : What To Watch For

March 5, 2007

Two weeks ago, the tone on Wall Street was overwhelmingly positive and the glass was half-full.  Last week, however, that all changed. The week began with former Fed Chairman Alan Greenspan’s remarking that a 2007 recession may be looming, and it ended with Dow posting its worst one week loss in more than four years. […]

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Fed President Poole Says “There Could Be A Recession”

March 2, 2007

Speaking in Chile this morning, St. Louis Fed President William Poole said that while “there could be a recession” in the coming months, the Fed is not expecting it. This echoes Ben Bernanke’s speech earlier this week in which he stated that the U.S. economy still has room for growth. Poole’s comments are soothing markets […]

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Sharing Your Credit Card Balances Can Lower Your Mortgage Rates

March 1, 2007

Typically, higher credit scores get lower mortgage rates and access to a wider array of mortgage products. Extent of Indebtedness comprises 30% of a credit score and is the second largest component in the credit scoring model.  In plain-speak, Extent of Indebtedness is: “How close is this person to maxing out his cards?” The ideal […]

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What’s Bad For Stocks Can Be Good For Rates

February 28, 2007

After the most major meltdown in U.S. stock trading since September 17, 2001, markets appear to be recovering this morning. This should reverse the drop in mortgage rates we saw towards the end of the day yesterday. To understand why mortgage rates go down when stock markets suddenly fall, we must look at the investor’s […]

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More “Safe Haven” Buying Drops Mortgage Rates

February 27, 2007

The Flight-to-Quality continues in the bond markets. Iran said today that the suspension of its uranium enrichment program “will never happen”, fueling speculation that an international stand-off is pending.  The United States has sent additional aircraft carriers to the Gulf in response. Normally, this action is enough to frighten markets into bonds by itself, but […]

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The Week In Review (February 26, 2007) : What To Watch For

February 26, 2007

Aside from CPI, last week was quiet on the economic data front.  Traders used the week to catch their breath and look around a bit at market conditions.  They liked what they saw and strong demand for bonds pushed mortgage rates down. This week, the big Market Mover Day is Thursday, coinciding with the release […]

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How Iran’s Uranium Enrichment Program Changes Mortgage Rates

February 23, 2007

In defiance of the UN Security Council, Iran is taking another step towards successfully building a nuclear weapon. Yesterday, it was reported by the International Atomic Energy Agency that Iran expanded its ability to create nuclear weapons and that it plans to “turn on” at least 1,000 uranium-enrichment centrifuges. Internationally, this decision creates questions (and fears) about […]

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How Decimal Points Mess With Markets

February 22, 2007

A little known fact about yesterday’s CPI numbers: they weren’t as inflationary as you would have otherwise thought.  It all comes down to decimals and rounding. What The Expectations Were CPI: 0.1% increase in January Core CPI: 0.2% increase in January What The Headlines Reported CPI: 0.2% increase in January Core CPI: 0.3% increase in January […]

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CPI Is Higher And Contained In Comfort Range

February 21, 2007

Markets did not like today’s Consumer Price Index figures which came in higher than expected.  However, the downbeat mood this morning is not enough to reverse the recent downward trend in mortgage rates. The chart at right shows CPI over the past two years and the band collars the Fed’s articulated “comfort zone” for inflation. […]

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The Week In Review (February 19, 2007) : What To Watch For

February 19, 2007

Fed Chairman Ben Bernanke carried the biggest stick in the mortgage rate market last week.  His “Goldilocks” testimony before the Senate Banking Committee spoke of favorable growth and subsiding inflation. Markets expected a harsher tone from Bearded Ben and that is why rates dropped post-testimony — the expectation diminished that the Fed will raise the […]

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Why Long-Term Mortgage Rates Are The Same As Short-Term Mortgage Rates

February 16, 2007

Interest rates are currently inverted, a market situation in which the longer you commit to lending your money, the less your return on investment.  It’s counter-intuitive so let’s delve a little deeper. Imagine if a friend asked you to borrow money for two years and you charged him interest on that money.  There are some […]

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Why Nations Care What Ben Bernanke Says To The U.S. Congress

February 15, 2007

The markets continue to show their appreciation for Fed Chairman Bernanke’s testimony yesterday and mortgage rates are falling in response. So, why do the Chairman’s words hold such sway over global markets?  Simple.  Buying and selling U.S. dollar-denominated securities is an integral part of central banking fiscal management policies worldwide.  When the Chairman says that […]

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Markets React To Bernanke’s Testimony

February 14, 2007

Addressing the Senate Banking Committee this morning, Fed Chairman Ben Bernanke gave the speech that most people expected: The current monetary policy (read: Fed Funds Rate) is at a level that both sustains economic growth, and tempers inflation pressures. In addition, inflation expectations “appear to have remain contained,” Bernanke said.  He called that “encouraging” and […]

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North Korea Stops Making Plutonium, But Will Markets Believe Them?

February 13, 2007

North Korea agreed to shutter its main source of plutonium today in exchange for energy and food considerations after months of negotiations with the United States and other countries.  The agreement did not specifically address the disarmament of existing nuclear weapons. News like this is a mixed bag for mortgage rate shoppers based on how […]

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The Week In Review (February 12, 2007) : What To Watch For

February 12, 2007

Despite the dearth of economic news last week, mortgage rates staged somewhat of a rally.  By the time the week ended. mortgage rates had retreated by half of the prior week’s major run-up.  The week was not without fireworks, however.  In prepared remarks, Dallas Fed President Fisher dropped a hint about future Fed rate hikes […]

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Three Fed Speakers Expected To Stay On Course Today

February 9, 2007

As the week closes today, three Federal Reserve Presidents are set to deliver speeches. The most well-known of the speakers is Dallas Fed President Richard Fisher.  Fisher is known for speaking candidly and has produced a plethora of sound bites over the years. Also scheduled to speak are Cleveland Fed President Sandra Pianalto and St. […]

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England and Europe Impact Domestic Mortgage Rates

February 8, 2007

The Bank of England and the European Central Bank left their benchmark lending rates unchanged today.  Both alluded, however, to the need for future rate increases and these policies can have a direct impact on domestic mortgage rates. When strong governments issue debt (i.e. bonds), it is “guaranteed money” and, therefore, risk-free.  When nations with […]

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Plosser Tells Philadelphia: Rates May Need To Increase

February 7, 2007

Last week, the Federal Open Market Committee held the Fed Funds Rate at its current level and indicated that the economy is expanding at an acceptable pace.  This morning, however, a Federal Reserve Bank President delivered a public speech to the contrary. In prepared remarks to the local Chamber of Commerce, Philadelphia Federal Reserve Bank […]

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The Two Methods To Generate Home Equity Are Not Equal

February 6, 2007

Home equity is created in one of two ways (assuming increasing home value and a non-negatively amortizing first mortgage). In the first method of creating equity, the homeowner pays down the principal balance on the mortgage.  This increases the difference between what is owed on the home and what the home is worth. In the […]

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The Week In Review (February 5, 2007) : What To Watch For

February 5, 2007

Last week was not for the weak-hearted as mortgage rates bounced around like a fumbled Super Bowl football.  In a widely-expected move, the Federal Reserve held the Fed Funds Rate at 5.25% for the fifth consecutive meeting, stating that growth is “moderate” and that inflation pressures may be subsiding. Consumer spending represents two-thirds of the […]

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