Marc's Mortgage Matter's

A poll says only 75% of Texans would vote to stay in the United States. The other 25% thought the U.S. was actually a part of Texas.

Over the weekend my daughter and a friend had a lemonade stand on the street. They weren’t selling much lemonade for 50 cents a cup, so they decided to increase the price to 75 cents a cup. I told them that is not how economics works. My daughter replied, “The price of a postage stamp went up to 44 cents a few weeks ago, and the Postal Service said they had to raise the price because fewer and fewer people are using the mail these days. Dad, that's government thinking: ‘Hey, nobody's buying our product. Let's raise the price.’”


When is the best time to add insult to injury? When you're signing someone's cast. What some may feel is along the same lines, do you remember how the former Countrywide Financial president formed PennyMac Mortgage last year to buy troubled home loans and related securities? And how people in the business cried foul: “First they originate the stuff, then give the mortgage business a bad name, and now they’re buying their loans back at 10 cents on the dollar?” Well, soon you may be able to buy stock in them. On Friday they filed with the SEC to sell as much as $750 million in stock to the public. PennyMac Mortgage Investment Trust would make some of its investments under a federal plan to offer financing to buyers of toxic mortgage assets from banks, the filing says.

Mortgage rates have been creeping up now daily - sure hope the climb stops so more folks can qualify. Rates seem to be moving comfortably into the mid 5's these days. Those that merited to lock in anything south of 5% are in a happy state of mind indeed, and did well!  Markets are really overreacting to a few positive reports as the economy is really in tough times still. That hurts the low rates we had and in the end of the day that sucks.

One trader said, “Mortgages are getting banged like a screen door in a hurricane.” I assume that he was talking about mortgages and bond prices in general. Anyone who has been in this business for any length of time has seen rates shoot up, or rates shoot down, dramatically in the space of a few days. Personally, and I have been wrong before, I think that we have seen the lows in rates. The US Government keeps borrowing, and there are signs that the economy is starting to revive in some areas. I don’t know why rates would go back down too far unless the economy deteriorates more. There are always dips as rates move back down, but I see the trend higher. But like I said, I have been wrong before. But the U.S. budget deficit is rising due to a combination of weak tax receipts and sharply increased spending, balanced against of deflation, weak demand, and slow global growth. What a market!