The Worry List: Even in the best of times, it pays to be careful.
I hate to be a downer. I really do. I encourage everyone in our industry to take a deep breath and enjoy the spike we’ve enjoyed for the better part of a year.
But don’t get used to it.
I think it’s time to add to my Worry List, and we’ll categorize it as an uneasiness with the unknown. I am noticing more of a sense of urgency from my banker and broker clients.
They want unique products;
They want special pricing;
They want to switch to a purchase shop;
They want to be introduced to the “big Realtor shops;”
They want to hire salespeople who have specialized in purchases and have great contacts with builders and Realtors;
They suddenly have excess capacity in their warehouse facilities and they have non-use penalties that are severe;
They are constantly projecting.
Every day they watch the pricing indicators go the wrong way.
Every day they either issue or receive pricing revisions –and the rates aren’t going down.
Every day they hear from their wives (or husbands) who complain that they have to cut back, but don’t understand why.
Every day I hear that they wish that they had gone to med school!
Every day they get a little closer to the realization that, as I’ve said once or twice, trees don’t grow through the clouds.
Why is all this happening?
It involves Europe.
It involves the Far East.
It involves that value of the dollar in relationship to many other currencies.
It involves the massive, and growing, U.S. debt.
It involves the Wall Street market makers who are either selling short or buying long treasury securities.
It involves unanswered questions about Freddy and Fanny and GNMA –experts debating what should change, and maybe even elminating or radically changing the agencies.
It involves every rumor ; every policy announcement; every discussion about bonds and where they are headed.
People are getting scared again. People don’t know what to do with their bond holdings in light of the recent stock market moves.
One strike or one street rally in Europe or the Far East can propel the bond market through wild gyrations, which affects mortgage rates and can either stop or start the refinance market .
One bad report on unemployment can stop the housing market in its tracks.
What to do? My father often told me: “He who looks into a crystal ball to discover what is going on with interest rates gets glass in his eye.” I’d suggest we plan for the worst, and hope for the best.