Happy Friday to all,
Another stellar day to follow up a not so stellar day for mortgage backed securities. Funny how this short-term profit taking works almost like clockwork. Yesterday was like “Déjà vu all over again”, to borrow a phrase from the great Yogi Berra. But you may have heard that once again, a deal had been struck to help ailing Euro Banks and their debt crisis. Investors were giddy, markets were rebounding, stocks were flying off the shelves again, but hold on, “not so fast” (Lee Corso), a deal indeed had been struck, but there is no plan in place yet for the deal! Investors are once again, concerned that this may not be over yet, thus causing fiscal concern over the state of the ‘Euro Zone’ economy, and thus the U.S. The beneficiary of this not-so-great economic news? You got it, MBS and Bond market. Remember, as I have always told you, during uncertain economic times, investors will put their money into safer assets such as mortgage-backed securities and bonds. So MBS are having their day, and it’s almost completely wiping out the losses we saw yesterday as rates jumped up over ? percent. Mortgage backed securities are currently up 14/32 and the Dow is up 20 points and the NAZ just barely hanging tough at 1% on the board as I write this.
The statistics: Consumer income edged up .1%, a potentially positive note, but consumer spending went up last month at a .6 clip. How could that be? Simple, consumers are dipping into savings, and if you are spending more and your income is going up less than you are spending, it doesn’t take a genius to see that this is not sustainable for very long. The saving rate fell to 3.6% which is the lowest level of savings our economy has seen since December of 2007.
Why am I boring you with these numbers? Because it is just more evidence that we will see rates continue to be low for quite some time. True, there will be glimpses of positivity during the coming year, but they are likely to be brief, and now is still a great time to take advantage of the current mortgage rates.
Current Mortgage Rates: Assuming well-qualified individual with 20% to throw at a Single-Family Home for investment, can leverage at 5.125%. Same assumptions for 2-4 Unit Investment Purchase: 5.0%.
That’s all I got, so in case you need a reminder, Halloween is here in 3 days, so if you haven’t started carving your Pumpkins, you best get a move on and Get ‘er Done!
Here’s my number: (210) 557-6320
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