Mortgage news
"The Jobs Report was released today, and reflected a decrease of 80,000 jobs for the month of March. This was positive news for interest rates, and the 30-year conforming dipped to 5.875%, and 5yr Jumbo to 6.25%."
My opinion is that this is bad news overall. What got us into this mess is ignoring the fundamental values of economic success. Manipulating the economy by reducing interest rates is an artificial stimulus, which will eventually catch up to us and we will have to face the consequences.
At the end of the day, less jobs means less output, less output means less growth and consumption and less growth and consumption means less wealth. Cheap money has created an environment where investors are accepting more risk for less reward. An example is the way people have been buying investment properties with 3-5% cap rates.
If one thing goes wrong with any of these properties, and something always does, the investor is going to make zero or negative on their money. It's easier to invest in a bond and a lot less hassle. The other problem with cheap money is that it feels like, and I am just a layman, that our country is just printing the stuff, with no more regard for what they are doing than an office worker at a xerox machine. We need more money, ok, let's photocopy another 10 billion. And, perhaps the rest of the world has caught on being that our dollar is historically weak.
My opinion is that this is bad news overall. What got us into this mess is ignoring the fundamental values of economic success. Manipulating the economy by reducing interest rates is an artificial stimulus, which will eventually catch up to us and we will have to face the consequences.
At the end of the day, less jobs means less output, less output means less growth and consumption and less growth and consumption means less wealth. Cheap money has created an environment where investors are accepting more risk for less reward. An example is the way people have been buying investment properties with 3-5% cap rates.
If one thing goes wrong with any of these properties, and something always does, the investor is going to make zero or negative on their money. It's easier to invest in a bond and a lot less hassle. The other problem with cheap money is that it feels like, and I am just a layman, that our country is just printing the stuff, with no more regard for what they are doing than an office worker at a xerox machine. We need more money, ok, let's photocopy another 10 billion. And, perhaps the rest of the world has caught on being that our dollar is historically weak.
posted by Simon at
10:35 AM
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