New Government Refi Program Coming?
With few economic reports last week, focus was on Thursday’s announcements from President Obama and Federal Reserve Chairman Bernanke. The President introduced the “American Jobs Act”, a $447 billion package to include tax cuts and spending to stimulate job growth. Today, this spending package heads to Congress, but details around how it will be financed (which is critical given the U.S. budget deficit) won’t be unveiled until September 19th. Bernanke mentioned that the Fed has tools in its arsenal to help boost the economy, but some policy makers are divided on how much stimulus the Fed should provide.
President Obama also alluded to a government sponsored refinance program that would help Americans by cutting their mortgage payments, in his speech. Shortly after, rumors started circulating around a refinance program involving the Federal Housing Finance Agency (FHFA), but the FHFA quickly quelled these rumors, indicating they are only reviewing options at this point. Keep a close eye on news in this arena as it could mean some additional relief for borrowers with lower property values who may not easily qualify for the existing HARP or traditional mortgage programs.
Frequently over the past several months we have seen a “Flight to Quality”, as investors rely on the relative safety of U.S. Treasuries when international and domestic economic concerns rise. Today is no exception, as money has shifted away from Europe and global equity markets on renewed concerns of a default on Greece debt, along with the possibility that other European countries may follow. Talks of a possible European depression were only fueled further by the signs of instability within the European Central Bank as their Chief Economist just announced his resignation.
All told, as the world struggles to gain an economic footing, lower Treasury yields translate into lower mortgage rates. As we open up the week, rates are very aggressive. Keep an eye on economic news later in the week along with any updates regarding government stimulus. If we start to see positive economic momentum, mortgage rates may increase slightly to close the week.