September 8th, 2008 4:31 PM by BILL WILBANKS
It's Monday morning the day after Mr. Paulsen stepped up and made the largest policy decision related to the housing and financial markets in decades! There was a 200 bps swing this morning before 10 AM on lender points with a subsequent lowering of rates of approximately .375% today.
Apparently when he looked over the financial cliff that Fannie and Freddie were perched on and the length of the line of the financial institutions depending on both F&F through various and unsundry financial instruments (too big to fail on his watch) it scared the pants off him enough to step in and ask for the proverbial ball back to mix just a few metaphors.
Now what? Apparently most of the markets liked the action today so far. Rates have immediately fallen on conventional fixed mortgages and though it's probably still way too early to see where we land (and don't bring up "bottom" yet) it should improve the yield curve in the near term that has been running out of whack for many months, as both institutions padded their balance sheets and lenders following suit refused to lower rates in any significant way to the consumer as the Feds' lowered month after month.
Lower rates if they last, and a narrower yield curve if it holds true, can only help. Now if we can work on getting the backlog of listings down...! If nothing else, stopping the lobbying of the folks with the check book in Washington by Fannie and Freddie should help somewhat in the near term.
I am truly beginning tho believe this will bring even more move up buyers back in the market that don't have to wait for an absolute bottom to buy the new, bigger and nicer home they've been been waiting for. There is a bounce coming...Mr. Paulsen has the ball back. I'm ready. Who else is?