Wednesday, March 18, 2009

Get ready to refinance your mortgage?

The Fed just “printed” a trillion dollars.

One analyst expects mortgage rates to fall as a result …

Economists’ Reactions to the Fed’s Move - Economix Blog -

David Greenlaw, Morgan Stanley: The Fed’s announcement signals a clear intent to continue to drive mortgage rates lower and we expect them to meet this objective. This could represent a powerful source of stimulus for the household sector of the economy. In 2008, the average mortgage rate on the outstanding stock of loans was about 6.50%. So, if the Fed brings 30-yr fixed rate mortgages down to 4.50% and all homeowners are able refi, the aggregate permanent cash flow savings would be on the order of $200 billion per year.

We’ll be watching.

Of course now we’ll all be watching for bubble #3. We had stocks, then we had real estate. What’s left? A bonds bubble?

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