Industry NewsMortgage

The politics of bailout: a waiting game

Future-Proof: Navigate Threats, Seize Opportunities at ICNY 2018 | Jan 22-26 at the Marriott Marquis, Times Square, New York

Mortgage rates have not been able to hold the early-week low at 5.875 percent, but are no worse than 6 percent for the lowest-fee deals. The Fannie-Freddie takeover instantly knocked retail mortgage rates down 0.375 percent, but that's been it. The sky-high spread versus the 10-year Treasury note has compressed from 270 basis points to mere cloud-height 235 basis points -- but that's still 70 basis points too high. I have argued all year that the spread was not a credit matter, instead an artifact of an insolvent banking system unable to leverage positions. I win, and wish I hadn't. Economic data are sliding all over the world. U.S. retail sales in August were the worst of the year, minus 0.7 percent excluding autos. Newly surveyed consumer confidence rose here, probably on cheaper gas, but anxiety and confusion among civilians runs deep. To describe where we are today, begin with a review of the last year: In August 2007, the large end of the banking system suddenly froze. ...