A report from Bank of America Merrill Lynch revealed that the Federal Reserve needs to continue to back the mortgage market in order for the housing recovery to continue. The recovery may not be sustained if the Federal Reserve continues to scale back on its stimulus program, dubbed QE III, which will lead to higher interest rates. The investment bank sees that mortgage application activity has been weak, and if higher rates are ahead, they see application activity declining further.
Subprime mortgages are making a comeback after being almost non-existent after the housing market collapse. However, this time around they come with a few caveats…higher rates and big down payments. Lenders of subprime loans are now charging interest rates as high as 8 – 10%, with 25% to 35% down payments. The typical applicants for the new subprime loans are young, first time home buyers and former homeowners whose credit was destroyed in the housing collapse.
Malaysian Flight MH370 has been missing for two weeks and today news from the Malaysian Prime Minister revealed that the airliner crashed in the Indian Ocean, as observed from new satellite images from Britain. The plane had 239 people on board when it disappeared on March 8 after taking off from Kuala Lumpur bound for Beijing, China.