• The deed is done, as they say.  America has spoken and chosen a new Commander-in-Chief for our fine nation.  And whether you want a high-five or a shoulder to cry on in the wake of that decision, there is no doubt that a new era is upon us, like it or not.  No one knows exactly what Obama’s election will be an omen of, but everyone wants to tell you their opinion.  The fact of the matter is that opinions are like…well, you know exactly what opinions are like.  And everybody’s got one. 

    And so do I.  So please, enjoy them with my compliments.

    An enormous pile of taxpayer funded bail-out money is just starting to be put into motion.  Some of that money is authorized for direct purchase of mortgage-backed securities, which manually drives rates lower.  In the past two days alone we’ve seen fixed rates come down by over 0.25%, partially due to this allocation of funds.  MY BEST GUESS: GOOD FOR MORTGAGE RATES.

    No one knows what is going to happen with Fannie Mae and Freddie Mac.  It’s a well-known fact that the conservatorship under which both mortgage giants have been placed is an unsustainable situation.  Talks of privatizing the companies (letting private shareholders own the place and make the rules) or nationalizing them (having Uncle Sam bring them onto the balance sheet officially, dumping the risk on taxpayers) or some combination thereof haven’t gotten anywhere yet.  Something will need to be done in the very near future.  MY BEST GUESS: DEPENDS ON WHAT DECISION IS MADE.

    China’s economy is slowing at an alarming rate.  The USA and China are, for better or for worse, attached at the hip economically.  Historically, we buy their cheap exports and they buy our debt.  No one’s currency goes crazy due to the trade imbalance and everyone goes on happily ever after.  Their gross domestic product averaged out at 12% growth last year and has slowed to a quarterly reading of 9% annualized growth.  Now, while 9% is still a large number by our standards, try to realize the magnitude of their population boom.  If they don’t generate 15 million brand-spanking new jobs per year, they will not keep up with the growth of their workforce.  My guess is that they’ll have to turn on more spending domestically; and less spending on American debt.  Add on a slowing American consumer which will slash demand and jobs at Chinese factories, and you’ve got bad news.  MY BEST GUESS: BAD FOR MORTGAGE RATES.

    Obama is a middle-class-aholic, and the middle class would like to not lose their homes to foreclosure.  Most economists agree that a fundamental aspect of moving out of this financial slump is to repair the housing market and prop up home values.  Obama has made it abundantly clear that he is planning on making our housing crisis a high priority on his presidential list.  It may eventually kill us in either taxes or inflation, but he is going to make something work for the housing market, and fast.  MY BEST GUESS: GOOD FOR MORTGAGE RATES.

    The Fed Funds Rate is super-low.  With a little more stability in the markets, the cost of borrowing has the opportunity to come roaring downwards.  The Fed slashed rates by a full point (in two 1/2 point cuts) down to 1%.  As long as inflation stays tame, that could open the door for some very attractive mortgage rates.  MY BEST GUESS: GOOD FOR MORTGAGE RATES.


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