January « 2012 « MBSQuoteline Blog

Below is a collection of articles, news, and announcements associated with our industry.

Archive for January, 2012

Blog Talk Radio Show January 23, 2012: Chief Economist Fannie Mae

Tuesday, January 24th, 2012

Our special guest on the Lykken-on-Lending blog talk radio show today was Doug Duncan, the Chief Economist for Fannie Mae. Doug provided his thoughts on the economy, housing, Europe, and inflation, but the most interesting comments had to do with his answer to a question asking how he would characterize what will happen in 2012. Doug answered by directing the listeners to a Fannie Mae research paper entitled 2012 – Year of the Political Economy. This paper can be found on the Fannie Mae web site at http://www.fanniemae.com/portal/about-us/media/financial-news/2012/5609.html. Doug explained that 2012 will be very heavily effected by the number of regulations just added to the books, as well as the many new regulations to be issued in the months to come. The consequence of the huge number of new regulations is UNCERTAINTY. He estimates that uncertainty will cost the economy 1% in Gross Domestic Product or $500 to $750 billion in 2012, effecting both the consumer and businesses.

Click PLAY to listen to the podcast of this week’s BlogTalkRadio/Lykken on Lending with Dave Lykken and MBSQuoteline‘s Joe Farr:

Listen to internet radio with David Lykken on Blog Talk Radio

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Tags: David Lykken, Fannie Mae, inflation, Joe Farr, mortgage backed securities, mortgage industry, mortgage rates
Posted in BlogTalkRadio Podcasts | Comments Off

In The News: Greek Debt Negotiations 1.24.12

Tuesday, January 24th, 2012

Greece has experienced the worst debt troubles of any European nation, and its debt burden is clearly unsustainable. European officials and bondholders both want to avoid a default, so they have been negotiating a “voluntary” agreement to reduce Greece’s debt burden by 50%. As usual, though, the sticking point for the two sides is price. In the case of bonds, this means the yield on the new bonds. Bondholders want the highest possible yield. A higher yield means higher debt payments, however, and Greece will require financial aid from the IMF and other European Union countries to make the payments. A default would trigger many costs and raise the level of uncertainty for investors, possibly raising yields for other European countries, which gives bondholders some leverage. On the other hand, if the Greek government defaults, there is little reason to give bondholders anything. The lack of progress has caused a flight to safety, which has helped relatively safer investments, including US mortgage-backed securities (MBS). Mortgage rates are largely determined by MBS prices, and a “messy” deal or a default would likely cause US mortgage rates to move lower. If bondholders agree to a deal at a yield which Greece can handle comfortably, then investors may partially reverse the flight to safety trade, leading to higher US mortgage rates. The negotiations have been going on for months, and it’s not clear what will break the impasse. Meanwhile, US financial markets continue to be influenced by the news from Greece.