March madness?

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investorzzo's picture
Status: Diamond Member (Offline)
Joined: Nov 7 2008
Posts: 1182
March madness?

In more ways than one? Sure could be. Time to quickly discuss the theoretical end to Fed money printing to buy back mortgage backed securities. As you know, there’s plenty of thought on the Street that mortgage rates will pop immediately when this wondrous and oh-so experimental program comes to an abrupt end as is now the case. We’ve seen a bit of a pop in rates so far, maybe 30 basis points or so, but we’ll just have to see what happens from here. Moreover, the Fannie and Freddie fan club surely have a few cards up their collective sleeves in terms of being able to finance the purchase of mortgages from the private underwriters at favorable rates. Longer-term mortgage rates ultimately up? You bet. But there's simply too much riding on an “orderly transition” to believe anything dangerously abrupt will occur with rates, especially because residential real estate looks like it’s going down for the count again as per the NAHB numbers, lack of acceleration in mortgage apps and still very substantial foreclosure activity. Let’s face it, these days just where isn’t the “fix” in?

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