Friday Septmber 9, 2011
by John Sauro
The 3.50% coupon closed at 102.06 on Friday, an all time high. News of a possible Greek default pressured stocks lower and Mortgage Bonds higher.
While this is good for Mortgage Rates, markets could reverse in a heart beat on news of Greece averting default. So the advise is to lock into rates. See chart below.
President Obama’s address to the nation Thursday night on potential ways to stimulate the ailing economy gave support to a nationwide mortgage refinancing program.
Critics quickly argued the plan does not go far enough to repair the ailing mortgage finance market. Mark Vitner, senior economist at Wells Fargo (WFC: 23.52 -3.61%) said “that’s not the bold stroke that I want. It’s not just refinance; we want people to be able to sell their homes.”
I have been calling on our government since 2009 to implement a plan that I beleive could reverse the tide of the real estate market. A big part of the problem with the real estate market, as is with the economy, is consumer confidence.
The point is, no one wants to catch a falling knife. My proposal has been for the government to allow home buyers and home owners to write of a percentage of home value lost on their annual taxes for a period of five years.
Such a plan would stabilize home values almost immediately. Hence, reassuring home buyers that a home purchase will not result in losses. The cost to the government would be minimal, as once the market stabilizes, the need for the write off’s diminish. It’s a simple cost effective plan that gets to the heart of the matter.
Economic News
Home Prices Edge up 4 percent in the second quarter as per Clear Capital.
Jobless Claims rose more than expected, up by 2,000 to 414,000.
European Central Bank Leaves rates unchanged at 1.50%.