While we wrote last Monday that “Mortgage Rate Stability May Not Last,” it appeared as though it did. Mortgage rates held steady last week as the stock market’s woes “did produce somewhat lower Treasury yields,” which could help mortgage rates trend downward this week.
Mortgage Rates
That’s the view of the president of the Federal Reserve Bank of NY:
The U.S. economy will likely see moderate growth in the second half of 2009, but the recovery will be considerably slower than usual, the president of the Federal Reserve Bank of New York said on Wednesday.
A modest recovery in housing activity and car sales, the impact of the fiscal stimulus and a sharp swing in the pace of inventory investment should give the economy a boost, William Dudley said in remarks prepared for delivery to the Association for a Better New York.
The Federal Reserve said this week that the central bank may consider holding regular press conferences to inform the American people of their latest discussions and possible strategies to combat the ongoing crisis:
“I think it is important for the public to understand what is going on and to know that the government is trying to solve the problem,” Mr. Bernanke said in an interview. “They should know we have a plan and a strategy.”
Maybe, just maybe, it’s a sign of better times ahead (emphasis added):
The cost of borrowing in dollars in London fell for a sixth day as signs the worst of the global financial turmoil may be over made banks less wary of lending.
The London interbank offered rate, or Libor, that banks say they charge each other for three-month loans dropped half a basis point to 1.16 percent today, the British Bankers’ Association said, bringing its decline in the past three weeks to 16 basis points. …
While most economists forecast a 5.4% decline in the nation’s gross domestic product (GDP), a measurement of the country’s total output of goods and services, the growth indicator contracted less than market observers feared.
The 3.8% decline, despite beating predictions, is still the worst drop in 27 years — the most since the first quarter of 1982.
Subprime borrowers will eventually return to the marketplace as a demographic of great interest to lenders. Looking back on the trends of years past, it’s nearly impossible to predict when, but it’s certainly plausible to predict why such a statement may be true.
Looking back to the causes and effects of the surge in subprime borrowers when the refi boom dried up in 2004, it certainly stands to reason that due to current economic conditions and credit restrictions, a newly developed and under-served audience of “below prime” borrowers will emerge — and lenders will take notice.
By now we have all heard the comparisons of our current economy to either those during the Great Depression, or more recently, the 1982 recession. For those who weren’t alive or remember either or both of those past economic downturns, David Leonhardt of the New York Times recently explained that “The Economy is Bad, but 1982 Was Worse.”
In an attempt to compare the economic environment of 1982 and now, Leonhardt used historical information from the Bureau of Labor Statistics (BLS) going back to 1970. He compared several types of unemployment data: “Since the job market covers the entire economy and affects families in tangible ways, it seems to be the single best yardstick.”
There is little room to argue that the word “recession” could be voted the number one buzzword of 2008 — slightly ahead of “bailout.” Economists at the National Bureau of Economic Research announced today that the recession in the U.S. officially began in December of 2007:
Although a recession is conventionally defined as two quarters of successive contraction in gross domestic product, the private committee doesn’t require supporting GDP data to make a recession call. Its members focus on month-to-month changes in the economy.
The Consumerist is a favorite stop for us in our daily perusal of different financial blogs and websites. Just one of many entertaining features on The Consumerist is their “Recession Watch,” especially went it pertains to the world’s most famous chain restaurant — McDonalds. The recession has hurt a lot of businesses in different ways, McDonalds being no exception. As the credit crisis has froze lending, resulted in thousands of lost jobs, McDonalds has also been forced to tighten up policy in order to cut costs:
There are certain non-essential items Americans have and will continue to buy during these tough economic times, even though these items always seem to go up in price at least every year, and are hardly considered necessities — but that I suppose all depends on who you ask.
Candy, cigarettes, and alcohol — all “non-necessity” items, (again, depends on who you’re talking to) all products that tend to ride the inflation train, all still top sellers among consumers. I guess there are certain things many of us can’t live with out.
