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Treasury Secretary Paulson has been floating a plan to help people whose Adjustable Rate Mortgages (ARMs) are resetting at higher rates. The Street, for the most part, supports the plan, but does it really change the fundamentals of the housing industry?
JP Morgan has said it will not. Specifically, they believe the plan:
1) Does not address the current core negative issue in the housing market, that being the highly elevated levels of existing homes available for sale;
2) Would not rescue already currently troubled subprime loans; and
3) Would take at least 3-6 months to adopt and would be bureaucratic and difficult to implement with possibly restrictive qualifying criteria.
Bank of America has similar concerns: "We are cautious on the homebuilders based on limited buyer traffic, a lack of mortgage availability, and continued price erosion. On the positive side, we see a 55% decline in new construction activity and the potential for lower rates."
Still, there are signs of improvement. FTN Industries Midwest noted that "excess inventories of unsold housing are decreasing despite weaker demand trends."
Questions? Comments?
POPULAR TRADER TALK POSTS
- Stocks Lurking Near New Highs Again
- Risk Trade Is Back On
- This Week's Biggest Story: The Dollar
- Corporate Issuance Continues at Torrid Pace
- The Bernanke Dollar Bounce & Gross Says Forget About Rate Hike
- Colgate Really Sparkles After Hours
- Light Volume Has Traders Complaining
- Gold Shatters Another Record
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- The Retail Mind Game
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