What is going on in the stock market today?
- AIG, the huge insurance company, finds itself in trouble, downgraded, and potentially dragged under by recent events.
- Lehman Brothers will declare bankruptcy. The US Government decided that they did not want to back up Lehman's $60 billion of bad real estate investments, nor did Barclay's, nor did a plan to have all the major Wall Street firms pitch in $60 billion to purchase Lehman's bad real estate assets and create what's knows as a "Bad Bank" work out. ("Bad Bank" was chosen because the names Countrywide, Washington Mutual and IndyMac had already been taken.) Many investment banks worked over the weekend to figure out their exposure to Lehman Brothers, especially to their real estate investment portfolio.
- Bank of America said it would acquire Merrill Lynch in an all-stock transaction worth about $50 billion. Bank of America has the most deposits of any U.S. bank, and has both theirs and Countrywide's servicing portfolio, while Merrill Lynch is the world's largest and most widely recognized brokerage - it certainly will create a monolithic global financial services giant.
What has all this done to interest rates? The Lehman and Merrill news has pushed the stock market down over 300 points, and caused rates to drop. The 2-yr yield is down to 1.84%, the 10-yr is down to 3.53%, and fixed-rate mortgage prices are better by .5-.75, depending on the product and coupon.
If you have a good equity position in your home I would suggest calling your mortgage professional and take advantage of the rates while we have them!
This blog by:
Team Newington
Sacramento Mortgage Planners
(916) 687-6868
www.SuperiorLoanteam.com
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