Masses Hit Unemployment Line

While the market was anticipating about 1,000,000 new first time claims for unemployment benefits, the report showed 3,280,000.  It amazes me that some of the smartest financial minds could miss this number by such a large amount.  All you have to do is look at how many job gains we have had in the hospitality, entertainment and travel industries to know that this number would be astronomically high.  Some of the strongest job gains of recent years are in industries that are currently being decimated by the current environment.  Since this is only week one, we can expect to see the coming weeks to show growing losses.  This is the most dire state of our economy that this country has ever seen.  The sad news is that it will get worse before it gets better.

 

The stock market continues to show strength in the face of diversity in what I believe is a short term technical correction.  We can expect to see the stock market recover up to 50% of its losses before taking another dive lower, at least that’s what I believe will happen.  In any market, whether the momentum be improving or falling, a short term correction is considered a healthy move.  In fact, it could help set the market up for a more dramatic fall.

 

Mortgage bonds remain in a state of serious flux, with rates bouncing across the board.  The challenge we are now seeing is that mortgage loan services are no longer wanting to buy blocks of mortgages.  This is for two primary reasons.  The first being that mortgage loans are being refinanced so quickly that the value of a servicing portfolio is falling like a rock.  Servicers need to hold mortgage loans for a period of time before it is profitable.  Secondly, with defaults expected to climb, this is causing loan servicers to back away from adding to their portfolio.  If this doesn’t improve quickly, we could see a freeze where mortgage lenders are not able to fund many loans.  Be careful and just know that nothing is certain right now.

 

Given the severity of the mortgage crisis, we will maintain a locking bias.

Get your custom rate quote in 30 seconds

See your customized rate and fee options without sharing any personal information

See Purchase Rates See Refi Rates

Additional Articles

Still Need Help?