Pricing on rates is moderately worse again this morning.
In terms of mortgage rates we still believe that over the course of the next couple weeks we’ll see mortgage rates move lower. Working in favor of mortgage rates are technical trading patterns and the spread between 30-year treasury bonds (4.35%) and 30-year mortgage-backed bonds (5.30%) which are both backed by the US government. We expect these two rates to converge over time.
The big news of the day is the failure of Washington Mutual and the question as to whether or not the Federal bailout plan will pass. Watch today’s you tube video for commentary.
Cost of $700 billion in perspective:
Current US National debt: aprox. $9.8 trillion
US National Debt with $700 billion: $10.5 trillion
Current US GDP: aprox. $14 trillion
% of national debt (with $700 billion) to GDP: 75%
Other instances/ countries of developed countries having debt-to-GDP ratios that are higher:
US: % of national debt to GDP in 1940s: 110%
Italy: % of debt to GDP (2003): 106%
Japan: % of debt to GDP (2003): 154%
Canada: % of debt to GDP (2003): 77%
Current Outlook: near-term neutral, long-term floating