For the last several months I have been saying that the economy is not going to recover until we see job creation; private sector job creation at that. President Obama is doing everything he can to create government jobs, but what we need is jobs from all the companies listed on the stock exchanges as well as private sector jobs. With most major corporations continuing to cut jobs, the economy is NOT getting better.
President Obama has a press conference later today and I am sure he will paint a picture that is much different than reality. The housing market continues to worsen, mortgage rates are likely to head higher and unemployment is continuning to rise. How is this ANY improvement from where the economy was six months ago? It’s not; in fact, it is actually worse! I would not be surprised at all to see the stock market start to sell off throughout the summer and definitely into the fall. This will cause Americans to realize just how bad things have gotten.
I hate to see this happen, but there is very little to prove that anything in the American economy has improved. We continue to spend more and more money and now there is talk about ANOTHER stimulus? Just what we need, let’s give money to people who are irresponsible with their finances! On top of this, President Obama continues to alter the Making Home Affordable program in an effort to allow EVERYONE to refinance. Next thing we know, he will create a 200% loan-to-value refinance.
The only way this economy is going to get better is to flush out the “terds.” If we continue to prop up bad companies and individuals with very bad financial habits, we are just going to continue to spiral downward. Let them fail! They need to know that there are consequences for making bad financial decisions. Right now, people and corporations know they are going to get bailed out, so why change any habits?
Please use Subprime Blogger to keep up with your daily mortgage rates. There are also articles to help you get information on mortgage rate trends.
On July 1st, 2009, President Obama announced that the refinancing part of the Making Home Affordable plan was being adjusted. When the plan was first released in March, lenders were urged to let home owners with a 105% loan-to-value apply for a home refinance and likely get a low rate refinance. Obviously this was not enough as it has been up to 125%. Lets crunch some numbers to try and explain the different.
If you bought a $300,000 home in 2007 and you have paid $15,000 in principal since your purchase, you would have $285,000 of loan left to pay. If you recently got your home appraisaed and the value was $245,000 you have a 116% loan-to-value in your home. If this was the case prior to July, you would have no chance to refinance at ANY rate, no less a low rate. Now that President Obama has extended the Making Home Affordable plan, you have a chance to refinance and it is likely that you will get a decent rate as the government is forcing the lenders hand.
The question that we all must ask is “will this help?” My answer is no. Unfortunately it does not matter how low of a rate you allow home owners to refinance at, there is still too much supply on the market. As long as housing supply outpaces demand, we are going to see a decline in home prices. To make matters even worse, the 10 year treasury looks to be getter very close to support levels which means we could see a strong short term uptrend soon. If the 10 year uptrends, you can be sure that average mortgage rates will follow. This means that home prices will come down even more.
The 125% loan-to-value refinance plan will help many to refinance, but overall I do not think it will help the overall housing market or the economy. Big time job losses were reported this morning and I will have much more to come on that issue….
I am still going through my resources to get the entire mortgage bailout package expansion. For now, please check out this link as it explains a good deal of what you will want to know. Basically, President Obama has expanded the Making Home Affordable Refinance Program to allow those who have up to 25% negative equity in their home a chance to refinance. Prior to today, only a 105% loan-to-value was allowed to apply for a refinance. Remember, this is only for mortgages that are backed by Fannie and Freddie. Much more to come on this…….
The 10 year treasury rate pushed higher to 3.544% yesterday. We have still yet to see the 10 year get all the way to the 50 day moving average but the intense sell off from 4% might prove to be the reason for an early bounce. With that in mind the 10 year has moved higher the last two days which has brought the 50 dma up to 3.44%. It will be interesting to see how average mortgage rates react if the 10 year starts a strong uptrend as I think it will. The equation used for the correlation between mortgage rates and the 10 year treasury rate is y = 2.7283(x)^2 + .5881(x) +.0308.
10 Year Treasury Rate - 3.544%
The correlation shows that the 30 year fixed rate should be approximately 5.50%. Actual rates…
30 Year Fixed Rate Mortgage - 5.37%
Please use Subprime Blogger to keep up with current mortgage rate trends. There are also several articles to help you keep up with average mortgage rates.
Interest rate predictions for July could bring bad news for those that hope to get mortgage rates under 5%. When looking at the 10 year treasury rate, it looks like there is strong support at 3.4% and the 10 year has been sold off very hard since almost hitting 4%. I would be very surprised if we continue to see a sell off through the support level of the 50 day moving average. If we see a bounce off of 3.4%, look for mortgage rates too see a bounce off the 5% level.
President Obama and Ben Bernanke are going to do everything possible to not allow this to happen, but sometimes there is nothing the government can do as this is a free market capitalist country. The buying of mortgage backed securities coupled with the auctioning of treasury bonds has pushed average mortgage rates lower after the quick rise from 4.8% to 5.6% in June. At one point the government is going to run out of ammo for keeping mortgage rates low.
Unfortunately, when they do run out of ammo, there is going to be a slingshot effect with interest rates. If you remember the first two weeks of June, when rates went up almost a full percentage point in two weeks, you know exactly what I am talking about. Sadly, it could be even worse as we are likely to see inflation start to set in as the Federal Reserve Bank has been printing money at will.
With that being said, the interest rate predictions for the month of July shows interest rates going higher, especially towards the end of the month. It is very possible that we will see mortgage rates grind sideways to downward until the 10 year treasury rate hits support, but then we are likely to see a strong uptrend. By looking at this chart of the 10 year, you will notice that we are almost at support. There has been a weak bounce so far, but expect that uptrend to get much strong on its push towards 4%.
If the 10 year treasury rate does hit 4%, look for mortgage rates trends to push rates towards 5.85% or higher. If you have been considering a refinance or buying a new home, now might be the best time to do it when mortgage rates are at the bottom of an upward trend channel. If you wait until the end of July, you might see daily mortgage rates much closer to 6%. Ultimately, interest rates looked be putting in a short term bottom at the beginning of July and then I expect to see an increase through August and possibly into September. If this is the case, we may see a strong decline in the stock market.
For those of you that were unaware, Subprime Blogger is owned and written by one person…..me. For the last eight months, I have been writing, marketing and performing SEO for this website coupled with being a full time retail manager. If you would like to know how I feel about my retail management job please read Why Retail Management Sucks. I recently put in my two weeks notice and decided that I will pursue something I love to do which is research, writing and internet marketing. My employment as a retail manager ends July 3rd and I will commit my time to Subprime Blogger.
I am very excited to do this as I throughly enjoy everything about writing for and promoting websites; for more on this read How to Make Money - Do What You Love, the Subprime Blogger Story. Now that I will have the ability to update this site during business hours, I will try to be more on top of up-to-date issues like the Case-Shiller home price index, job reports and other government released pieces of data. I will not write an obscene number of articles a day as I would rather write a few quality articles than several mediocre articles.
Being the owner of this website, I will also do all the marketing and SEO for the site. This will take up part of my day which will reduce the amount of content I can write. If any of you would like to submit a guest article, feel free to send it to jwojdylo@subprimeblogger.com. I will be more than happy to post your article with a few adjustments to help it with rankings.
With that being said, here is to a full time Subprime Blogger. I hope you enjoy reading the content half as much as I enjoy producing and marketing it. If you have any topics you would like to read about, feel free to let me know. I will be more than happy to branch out and research other financial related topics. My first article as a full time blogger will be Why Retail Management Sucks, Part II so please return the weekend of July 4th to enjoy this humorous, yet honest depiction of the retail management position.
Today’s funniest Google search brings me back to one of the funniest CNBC moments I have ever seen. Charlie Gasparino is known for expressing his honest opinion, but I don’t think he has ever blasted another host like he does in the video posted at this link: Charlie Gasparino Owns Dennis Kneale Video - A Must See. The google search that reached the site was
Dennis Kneale is an idiot
We know that Charlie sure thinks so!
Please use Subprime Blogger to get your mortgage rate trends. There are also several articles available to assist you in getting the best fixed rate mortgage.
Another day of sideways movement from the 10 year treasury rate on Monday. I fully expect this to continue until the 50 day moving average moves up to the current rate or the rate drops and finds strong support at the 50 dma around 3.4%. When this happens, watch out for another strong push towards 4% for the 10 year which means higher mortgage rates. The equation used for the correlation between mortgage rates and the 10 year treasury rate is y = 2.7283(x)^2 + .5881(x) +.0308.
10 Year Treasury Rate - 3.52%
The correlation shows that the 30 year fixed rate should be approximately 5.48%. Actual rates…
30 Year Fixed Rate Mortgage - 5.34%
Please use Subprime Blogger to keep up with current mortgage rate trends. There are also several articles available to assist you in getting a home loan modification.
Yesterday we saw a sideways move in the 10 year treasury rate; moving up slightly to 3.52%. I still believe the the 50 day moving average will hold as support and we will see a bounce coming soon. The equation used for the correlation between mortgage rates and the 10 year treasury rate is y = 2.7283(x)^2 + .5881(x) +.0308.
10 Year Treasury Rate - 3.52%
The correlation shows that the 30 year fixed rate should be approximately 5.48%. Actual rates…
30 Year Fixed Rate Mortgage - 5.36%
As predicted yesterday, mortgage rates had to adjust to the 10 year treasury rate and that is exactly what they did. Keep an eye on the treasury rate to make stronger mortgage rate predictions.
Please use Subprime Blogger to get your current mortgage rates forecast. I am also producing daily mortgage rates each morning that shows the correlation to the 10 year treasury rate.
Over the last few weeks, I have mentioned that mortgage rates would likely move sideways or decline in a slight manner; this is exactly what happened. I fully expected the 10 year treasury rate to fall to 3.4% where it should find support for two reasons. The 50 day moving average is at 3.4% and the up trend channel shows support at the same exact area. For more clarity, check out this chart.
If this does hold support for the 10 year treasury rate, look for mortgage rates to find support as well. I expect rates to be lower this week as the 10 year should fall to its 50 dma but I will make the prediction that we will see a bounce from there and mortgage rates will follow. With that being said, my mortgage rate predictions for this week are as follows:
30 Year Fixed Rate Mortgage - 5.27%
For any of you looking to refinance or lock in at a low level, now might be the time as a strong support level is going to be tested. We are sure to see government interaction when the mortgage rate trends upward, but how many treasury bonds can they possibly sell?