Image via WikipediaHenry “Hank” Paulson announced today they are using Tarp money to target consumer loans (credit cards, car loans, Home Loans) immediately. The Name of the entity “TALF” – Term Asset Back Loan Facility. Six Hundred Billion will be allocated to Fannie Mae, Freddie Mac, and Ginnie Mae. The auto, student, and small business loan markets will receive $200 Billion to help thaw the markets. This announcement and injection gave the FNMA 30-YR 6% a HUGE boost this morning pushing it up over 115pb.
Mortgage Securities appreciated the injection and in return we saw rates drop across the board. This could be the first leg in the credit thaw. The TALF announcement overshadowed the negative GDP decline of -.5%, which is result of constriction in consumer spending (the largest in 28 years). The drop in rates is a positive, this should be first step in credit availability and hopefully will eventually lead to easing guidelines which will make it easier for homeowners to purchase and refinance. The credit may be in the market, guidelines are still tight.
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1 comment:
Between mortgage bailout, wall st, and citigroup things seem pretty down right? Wrong. It isn't all doom and gloom if you know where to look. Most people don't realize how much money there is out there. During economic times like this, there is more money to be had than ever. Because of the bailouts and economy, lenders are bending over backwards to bail you out too. Believe it or not, there is people getting tons of cheap money nowdays to start businesses, buy homes, pay off debt, and more.
The Bailout for You
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