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I wanted to pass along a great audio clip from my CPA – Mark J. Kohler with KKO Lawyers. He hosts a weekly radio show online and some of them relate to Real Estate. This weeks clip focuses on the tax consequences to you as a seller when involved in a short sale or foreclosure.
I hope you enjoy it!
“Twist and shout.” The Fed inserted a “twist” into the market last week, but only time will tell if their decision will be cause for shouting. Read on to learn what the Fed did, and what this could mean for home loan rates.
The week began with speculation that the Fed would announce “Operation Twist” after its two-day meeting of the Federal Open Market Committee. What is Operation Twist? Essentially, Operation Twist is where the Fed sells its holdings of short-term securities and Notes and then purchases longer-term Notes and Bonds in order to try and lower longer term rates even further.
And Operation Twist is exactly what the Fed announced, but their announcement came with some key surprises:
So what does all of this mean for home loan rates? The Fed’s statement has heightened pessimism, fear, and concern…and normally those sentiments help Bonds (including Mortgage Bonds, to which home loan rates are tied) improve as investors seek a safe haven for their money. But it’s important to understand that even if Bonds improve, home loan rates may not improve much further.
Why? It is basic supply and demand: lenders’ pipelines have been overflowing with people wanting to refinance or purchase a home and take advantage of the historically low rates we’ve seen. This level of volume flowing into the system has already created a backlog of work for lenders, which means they may not pass along all the gains we are seeing in the Bond Market onto their rate sheets.
The bottom line is that home loan rates remain near historic lows, and now is a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients.
Forecast for the Week
Economic data will impact trading throughout the week by giving investors a broad look at the economy:
In addition to those reports, investors will be closely watching the movements in the Stock Market after last week’s plunge. The big questions will be: How low can Stocks go? And, are we in a bear market or just a correction phase?
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.