Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Boris Johnson Hits Coronavirus Panic Button Again, UK Accelertoing Covid-19 Second Wave - 25th Sep 20
Precious Metals Trading Range Doing It’s Job to Confound Bulls and Bears Alike - 25th Sep 20
Gold and Silver Are Still Locked and Loaded… Don't be Out of Ammo - 25th Sep 20
Throwing the golden baby out with the covid bath water - Gold Wins - 25th Sep 20
A Look at the Perilous Psychology of Financial Market Bubbles - 25th Sep 20
Corona Strikes Back In Europe. Will It Boost Gold? - 25th Sep 20
How to Boost the Value of Your Home - 25th Sep 20
Key Time For Stock Markets: Bears Step Up or V-Shaped Bounce - 24th Sep 20
Five ways to recover the day after a good workout - 24th Sep 20
Global Stock Markets Break Hard To The Downside – Watch Support Levels - 23rd Sep 20
Beware of These Faulty “Inflation Protected” Investments - 23rd Sep 20
What’s Behind Dollar USDX Breakout? - 23rd Sep 20
Still More Room To Stock Market Downside In The Coming Weeks - 23rd Sep 20
Platinum And Palladium Set To Surge As Gold Breaks Higher - 23rd Sep 20
Key Gold Ratios to Other Markets - 23rd Sep 20
Watch Before Upgrading / Buying RTX 3000, RDNA2 - CPU vs GPU Bottlenecks - 23rd Sep 20
Online Elliott Wave Markets Trading Course Worth $129 for FREE! - 22nd Sep 20
Gold Price Overboughtness Risk - 22nd Sep 20
Central Banking Cartel Promises ZIRP Until at Least 2023 - 22nd Sep 20
Stock Market Correction Approaching Initial Objective - 22nd Sep 20
Silver Bulls Will Be Handsomely Rewarded - 21st Sep 20
Fed Will Not Hike Rates For Years. Gold Should Like It - 21st Sep 20
US Financial Market Forecasts and Elliott Wave Analysis Resources - 21st Sep 20
How to Avoid Currency Exchange Risk during COVID - 21st Sep 20
Crude Oil – A Slight Move Higher Has Not Reversed The Bearish Trend - 20th Sep 20
Do This Instead Of Trying To Find The “Next Amazon” - 20th Sep 20
5 Significant Benefits of the MT4 Trading Platform for Forex Traders - 20th Sep 20
A Warning of Economic Collapse - 20th Sep 20
The Connection Between Stocks and the Economy is not What Most Investors Think - 19th Sep 20
A Virus So Deadly, The Government Has to Test You to See If You Have It - 19th Sep 20
Will Lagarde and Mnuchin Push Gold Higher? - 19th Sep 20
RTX 3080 Mania, Ebay Scalpers Crazy Prices £62,000 Trollers Insane Bids for a £649 GPU! - 19th Sep 20
A Greater Economic Depression For The 21st Century - 19th Sep 20
The United Floor in Stocks - 19th Sep 20
Mobile Gaming Market Trends And The Expected Future Developments - 19th Sep 20
The S&P 500 appears ready to correct, and that is a good thing - 18th Sep 20
It’s Go Time for Gold Price! Next Stop $2,250 - 18th Sep 20
Forget AMD RDNA2 and Buy Nvidia RTX 3080 FE GPU's NOW Before Price - 18th Sep 20
Best Back to School / University Black Face Masks Quick and Easy from Amazon - 18th Sep 20
3 Types of Loans to Buy an Existing Business - 18th Sep 20
How to tell Budgie Gender, Male or Female Sex for Young and Mature Parakeets - 18th Sep 20
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Dot.com Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Wall Street Mirrors Sentiments of Main Street

Stock-Markets / US Economy Sep 12, 2013 - 09:20 AM GMT

By: Submissions

Stock-Markets

Eleonora  writes: Homeowners face uncertainty moving forward! Major developments are taking place in the banking sector across the United States. The mortgage boom is now a thing of the past. More and more banks across the United States are closing their facilities and financial units that traditionally worked with customers to refinance their home loans. In fact, one of the major lenders – JP Morgan – laid-off an estimated 2,000 workers during the month of August. 50% of the workers were in the home loans departments.


According to industry sources, JP Morgan is set to slash some 17,000 jobs by 2014 – the majority of which are in the departments which handle bad home loans. The layoffs, which have taken place recently reflect a new trend which is fast gaining momentum across the United States. The layoffs are not limited to home refinancing units. And much the same is taking place in Wall Street banks too. Some of the bigger banks that have announced plans for layoffs include Citigroup with 120 jobs, Wells Fargo with more than 3000 jobs, and Bank of America with more than 2,100 jobs.

Mortgage Applications Plummet as Refinancing Rates Increase

As the mortgage rates increased during 2013, so applications for home loans across the US dropped precipitously. In fact, analysts indicate that this is the lowest level of US home refinancing applications in four years. A drop of 13.5 percent as of September 6, 2013 was recorded in applications for home purchase loans and home refinancing loans. The impact of the rising interest rates has put the brakes on applications at major lending institutions around the country. The index is now at its lowest point since November 2008 – the period which marked the beginning of the financial crisis. This comes hot on the heels of information which was released prior to the US Federal reserve considering a bond repurchase program of mortgage backed securities. Support from the Fed has been a catalyst to boost the prices of homes across the country. The slump between 2008 and 2012 in home values seems to have turned the corner, but the downside is that applications are slowing as prices rise. In fact, the cost of borrowing money has spiked dramatically since May 2013.

30 year mortgage rates increased some seven points to 4.8%, while the refinancing index dropped 20.2%. The message to be taken from all of this is that the increasing interest rates are starting to be felt by new entrants to the homeowner markets as well as existing homeowners who are looking to refinance their mortgages. One of the leading industry mortgage lenders – Wells Fargo & Co is expecting a drop in the region of 30% for home loans during this present financial quarter. Meetings are slated to be held between the 17th and 18th of September by Federal Reserve Bank policymakers regarding whether to intervene with the bank's assistance in the economy. Caution appears to be the order of the day across-the-board. Third-quarter earnings are a mere four weeks away and projections for Wells Fargo & Co originations are in the region of $80 billion for the 3rd quarter. This is down $32 billion from the last quarter. Banks and their analysts are uncertain of the full impact that rising interest rates will have on the profitability of big banking institutions.

Fannie Mae and Freddie Mac under Government Conservatorship

5 years ago, Fannie Mae and Freddie Mac were taken over by the federal government. The result of scores of defaulted mortgages sent the companies into a tailspin. Today, things are very different. Profit levels are in the billions of dollars – and the US Treasury is collecting handsomely. The profitability of the companies is directly related to government assistance and this is a bone of contention for lawmakers and their constituents. As the government's involvement in Fannie Mae and Freddie Mac continued, so they purchased stock options to keep them afloat. By 2012, the housing market comeback from its low point of 2008 and at that stage, the companies began raking in big profits. Individual investors are seeking their share of profits from the government, and demanding that government conservatorship ends. Naturally investors are looking to one another as they decide whether to pour funds into the mortgage market. Fears of another crash are omnipresent, especially given the tepid response of key market players to the slow recovery.

Millions of Americans Facing Debt Crisis

In spite of the increasing home prices across the country, some 3 million Americans are facing uncertainty regarding loans that they have signed. This has resulted in a negative home equity rate and it is the fifth quarter that such an occurrence has taken place. It is estimated that over 12 million homeowners with a mortgage owe other banks and lenders more than their homes are currently valued at. While this figure is down from 2012, it is still exceptionally high. The problem arises where homeowners are severely indebted to their mortgage lenders, and modest increases in home prices have not offset the tremendous debt that they owe. The overall figure is estimated at 20% – that is how much the typical American with a mortgage is in debt. Stock markets around the world reflect the uncertainty that permeates households across America. Naturally diversified portfolios are being punted as means of bolstering one’s nest egg in the face of such economic turbulence. Stocks, indices, commodities, binary options, and forex are increasingly being looked towards as alternatives to traditional investments. One thing looks certain for the short to medium term, home prices will continue to move in a positive direction. This bodes well for laying a solid foundation for middle-class families around the country, thus freeing up disposable income for the aforementioned alternative investments.

About the author:Eleonora Marchettiis an expert on financial markets specializing in foreign exchange and trading in binary options. An honorary graduate of the SDA Bocconi School of Management in Italy, she provides consultation services to various economic powerhouses, including the globally renowned binary options trading firm, Banc De Binary.

© 2013 Copyright Eleonora Marchettiis - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules