It’s official: Barack Obama is the Commander-in-Chief, despite some impromptu rewording of the presidential oath.  He even still has that new president smell.  In the midst of two wars, rapidly increas­ing unemployment (Caterpillar, ING, Microsoft, Home Depot, Sprint, Pfizer, and US Airways all cut thousands of jobs today), and a sharp and growing international recession, Americans are hopefully hoping for all that hope that Obama talked about during his campaign.

I can’t personally comment on the hope aspect of things, but I can guarantee you that change is coming in a big way.

One of the first actions taken by our new president is to push through a stimulus package riddled with tax cuts for both families and businesses.  The price tag: $825 billion (so far).  By the time it actually gets implemented, it may top one trillion dollars.  That’s a one with twelve zeroes after it.  Yikes.

Needless to say, since raising taxes isn’t an option right now, Uncle Sam is gonna have to go borrow­ing.  That process is beginning this week and has no end in sight.

“So Greg, you’re a mortgage guy.  Why do you care about what Washington DC is doing?” you ask.

Well, Uncle Sam’s debt is competing with mortgage-based debt to draw investors.  The more supply that hits the street, the higher yields they will have to offer (meaning higher interest rates) in order to stay competitive.  And that is just the phenomenon we’ve seen that has driven interest rates up for 7 trading days straight.

As a sidebar in the “for-what-it-is-worth” category – it is probably worth noting that even with the re­cent increase in mortgage rates, note rates are still at least one-full-point lower than they were just three months ago.  I know that doesn’t mean much for those who are targeting a 4.5% or lower 30-year fixed mortgage interest rate – but for those with more realistic expectations the current range of rates offer what will likely prove to be solidly within a very narrow variance of the best mortgage financing opportunity of lifetime.

Another bright spot is that the National Association of Realtors released data showing that existing home sales surged in December of 2008 at a 6.5% annualized pace.  This is rather shocking because December is usually viewed as a slow month for real estate (because who’s got time to buy a home when you’re bargain hunting for a new sweater for junior?), so this is a great sign that all the pent-up demand for homes is finally starting to flow back into the market.

It’s about time.

www.GregWhiteside.com