Now that the Fed has stopped buying aged as well as recent loan production, now what?
Everyone in the business, including investors, knows that these loans are higher quality than those of a few years ago. These are fully documented loans with stricter underwriting guidelines as well as DTI’s. Not only that, but in many markets property values are stable or actually increasing, according to some measures. But investors in all fixed-income securities face the prospect of higher rates, which can drive down the value of a bond as well as its steady payment stream. Even incase you think that the economy is stagnant, you can’t ignore the fact that the stock market has improved for five weeks in a row, is up 6% during that time as well as is up about 36% in the final 12 months!
