Traders brushed off Tuesday and Wednesday's passage of the American Recovery and Reinvestment Act and the President's mortgage relief plan, respectively.
It showed how unsure markets remain about the stimulus package and its probable impact on the economy.
As a result, mortgage markets worsened last week, albeit slightly. It marked the 4th week out of five in which mortgage rates rose.
However, there were a few notable new items for American homeowners and home buyers last week:
Taken separately, these points aren't especially noteworthy. Together, however, they're very important.
In reducing the number of homes for sale while, in turn, spurring demand for them, last week's policy shifts should provide key support against falling home values nationwide. More buyers competing for fewer homes tend to make prices go up, after all.
This week, we'll see if buyers are responding. Two housing-related data points are released.
On Wednesday, it's January's Existing Homes Sales report. After soaring 6-plus percent in December, economists expect another big increase. This makes sense because falling prices make homes more affordable and banks are getting more efficient with selling foreclosed properties.
Then, on Thursday, the New Home Sales report hits the wires. It's expected to show little or no change.
As for mortgage rates, expect the same unpredictability we've seen since the start of the year. As Wall Street comes to terms with the various stimulus plans and the fate of our nation's largest financial companies, money will flow in and out of securities markets with fluidity and speed and that includes mortgage-backed bonds.
Rates should carve out a wide range this week. If you're not currently floating, consider locking in to avoid the risk of higher monthly payments.
(Image courtesy: Wall Street Journal)
In Mesa, Arizona, Wednesday, the President presented the Homeowner Affordability and Stability plan, a multi-pronged effort to support the housing market.
The story made the front page of nearly every newspaper in the country.
The president's plan is sweeping:
It's a broad plan with many positive angles, but for now, we can't forget that it's just a plan. Although the White House shapes and influences housing policy, Congress, Loan Servicers, and the Federal Agencies must still implement and execute it. Until that implementation occurs, these reforms exist only on paper.
It's a key aspect of the speech that's not getting coverage.
One thing we learned during the stimulus package debate was that just because the President wants something to happen doesn't mean that it will. There are always details to be worked out and that's one reason why the Homeowner Affordability and Stability Plan couldn't go into effect immediately. There are still loose ends to tie and details to define.
According to its website, the White House lists March 4, 2009 as the plan's effective date. Until March 4, therefore, nothing in Wednesday's speech is guaranteed.
(Image courtesy: Birmingham News)
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Specializing in credit restoration, mortgage acceleration, debt elimination, and wealth building for future and present homeowners alike. Call me to discuss and make your financial goals a reality.
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