Posts Tagged key rate
Economic Predictions for 2009 from Bloomberg Analysts
Posted by Top Home Loans in Economy, Mortgage Advice, Mortgage News, Real Estate on January 3, 2009
With investors looking towards the next year of the stock market, what predictions can be made about the next year of the market. Bloomberg reports that it will be more of the same in 2009. Although, they think that it may not be as bad as 2008, the analysts are still predicting that it will not be a good year. Looking back to 2008, most analysts were projecting that 2008 would be a good year. A lot of analysts were generally bullish, and we saw where that went. With the government dumping trillions of dollars into the economy, it would be surprising if there wasn’t some kind of market recovery; however, what will be the lasting implications of what the government is doing.
With over 3 million properties in default, and with analysts expecting that number to increase to over 8 million. The government is trying to reduce mortgage rates to below 5% to try to bring buyers back to the market; however, with consumer confidence at an all time low. Who is willing to buy a property that may depreciate in value over the next few years? Who will buy a property that may have a mortgage worth more than the property in the next few years?
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The Housing/Credit Crisis And Details on More Pain to Come
Posted by Top Home Loans in Credit Information, Economy, Investing, Mortgage News on December 19, 2008
Before you consider investing in either the stock market or the housing market, make sure that you understand the risks that you will be taking in this market. T2 Partners LLC has put together an exceptional analysis of the market outlining the damage that the Subprime has caused and what a small portion of the total outstanding debt it really is.
Alt-A Mortgages
The first thing to worry about when looking at this chart is the over one trillion dollars in Alt-A loans. Alt-A loans, also called called alternative documentation loans, is a loan that a borrower will be able to obtain with a good credit score. It uses a different method of qualifications instead of receiving the standard employment documentations. This is a good product for those who are self-employed or run there own business. The problem with these is during times of recession, a lot of small businesses will go under causing these loans to default. Also, a lot of borrowers were qualified without the lender knowing about any income at all.
Credit Cards and Auto Loans
Recently, we went through a time frame of very easy credit. Many people were able to receive tons of money without very many requirements to be able to receive the money. People have accumulated large amounts of revolving credit. During times of crisis, many people have had to resort to falling back on their revolving credit in order to be able to pay their mortgage payments, car payments, and other necessary payments. The amount of consumer debt has added up and the consumer has no way that they will be able to pay it all. The only option for many people seems to be declaring bankruptcy.
Commercial Lending
As the consumer begins to falter, the consumer will have less and less money available to purchase goods and services. Companies will see their revenues decrease on a steady basis. As the revenues decrease more and more, they may have to resort to closing locations or even closing down. As all the contracts begin to be canceled, many companies may default causing an extreme amount of defaults on commercial lending as well.
The subprime implosion was only one pillar of the multiple arms of lending that the major financial institutions do. By this one arm falling, it has caused over 25 banks to close their doors and go into bankruptcy. We can only imagine what pain will come if any of the other arms of the banks goes down as well.
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The United States Fed Drops Interest Rates to 0.25%
Posted by Top Home Loans in Credit Information, Economy, General Business, Investing on December 16, 2008
The federal reserve decided on December 16, 2008 to lower rates to an all time low of 0.25%. The reserve also vowed to use all available weapons that they have to combat the credit crisis; however, after previous rate cuts, things did not improve. Home starts are down, consumer price goods are down, people are not shopping, and banks are not lending. With more and more companies downsizing due to endlessly decreasing profits, what do we have to see happen to end the financial carnage.
With so many problems threatening the global economy, many question when we will finally begin moving back into a positive confident market.