The Fed makes a rate cut and current mortgage interest rates rise. The current mortgage interest rate on 30 year fixed loan routinely inches up compared to rates before the cut.
Consumers are expecting the opposite to happen and yet it rarely does. This opposite market reaction is pretty consistently over the last few cuts.
The Fed rate cut this week came from and emergency meeting when the Dow futures were down almost 500 points. The rate cut came just in the nick of time stemming a stock market crash…or so we’re told.
Yes…at least that was how it was reported in the media… a crash as bad as Black Monday two decades ago…and we were 60 minutes away. Tick- Tock…
Mortgage stock prices are dropping like a stone creating a huge profit opportunity. I wrote a post 10 months ago on my ActiveRain blog showing folks how to “short” mortgage stocks to bank these profits.
Since then a most mortgage stock prices have literally freefallen. Right after that post, Novastar’s stock (symbol: NFI) dropped 40% in one day down to about $15 a share. Today Novastar has dropped even further down to $2.08 another 60%.
We are hearing a lot lately about how the subprime lenders are dying due to the default rate inherent in loan programs which are primarily adjustable rate with lax income verification and/or credit requirements. This is where most people who don’t have a subprime loan start nodding off…snoozzzzZZZZ.
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