We’ve heard the bad news again and again recently. I understand full well that we’re in a time of economic uncertainty at present. In fact, maybe it’s not an “uncertainty” in your case, but more of a “certainty” as you too are feeling the pain of an economic downturn like we haven’t seen in at least 30 years. There is some good news however!
- The Producer Price Index (PPI) released today which measures overall inflation indicates that inflation levels are actually lower than expectations. This is primarily due to a huge decrease in the cost of gasoline. Of course an increased cost of gasoline causes the price of almost everything to increase commensurately, as it takes fuel to produce and deliver goods, and ultimately fuel to store and display goods to be sold. Thus “Core PPI” which excludes fuel and food rose to it’s highest level in almost 20 years. Certainly the Core PPI should be considered a lagging indicator as the numbers are so dramatically affected by the cost of energy. Thus, the cost of goods you buy should be falling soon with the falling price of energy!
- Additionally, because inflation is not considered to be a problem, mortgage interest rates are continuing to fall. I have been saying for weeks now that I predict interest rates will continue to fall, and indeed we’re seeing that happen!
- The Veterans Administration recently announced that they will allow refinances of up to 100% of the appraised value of the home. This means that whether you have a VA loan already, or you only have a conventional loan but have VA eligibility, you can refinance to today’s low interest rates for up to 100% of the appraised value of your home. This can include receiving cash from the closing!
- And finally, if we look at history we see that in fact we may be ready for a huge market reversal! Check out this Big fall, then big gain! – The S&P 500 lost 16.8% (total return) in October 2008, near the fall of 14.5% in August 1998. In the 12-months after that 14.5% decline, the S&P 500 gained +39.8%! The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market.
I’m looking forward to next week, as we’ll be celebrating Thanksgiving! If you have a question about anything mortgage related please feel free to call me! And, subscribe to this blog!