Hey fellas, can we please get some relief?
This week has been another rough ride for all of the markets; the stock market has continued it's steep down-trend despite two up days this week and the financial market got a downside surprise when Merrill Lynch reported that they are going to write down 15 billion in mortgages - the expectation was for 10 - 12 billion.
Bernanke tried to help the markets on Thursday, and there was a temporary respite from the carnage, when he said that the Fed stands ready to do whatever is needed to keep the economy from slipping into a recession and return to sustainable growth. The other good news on Thursday was the announcement that Bank of America reached an agreement to buy Countrywide.
I don't think the FOMC meeting can get here soon enough - it is at the end of January. The growing expectation is for a 50 basis point reduction in the Fed Funds rate down to 3.75% which would mean an equal reduction in the prime rate. In the meantime, earnings season will be in full bloom over the next couple of weeks. The hope will be for good earnings and projections that aren't too severely negative. If we can get some relatively good news on the earnings front, a reduction in the price of oil, and a solid rate cut from the Fed in addition to some consumer confidence and stabilization in the credit market we might be able to turn this ship around.
It is, afterall, a great time to buy a first home or a move-up home with prices very inexpensive and rates extremely low. There are plenty of good mortgages to be had for the right people and full-documentation loans are getting approved with higher debt ratios. FHA is strong up to its loan limits and there are also some great jumbo loans with very low rates for those who want to buy or refinance homes beyond the conforming threshhold of $417,000.
Reverse mortgages are a great alternative to traditional mortgages for homeowners over the age of 62 who have equity in their home and would like to eliminate their monthly mortgage payment and possibly get some cash, monthly income, or both.
For the good of our country, its citizens, and our economy, I can only hope that we all come together and start acting financially responsible by spending within our means and investing for retirement. Have a great weekend.
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