After having been clobbered for the last few months, it was time for the financial stocks to shine. Apparently the market thinks that most of the risk is out of those stocks. Eight of the ten most active stocks on the NYSE were financial stocks. Here ar the numbers:
Company Price Percent Change
Wells Fargo $27.23 (+32.76%)
BofA $22.67 (+22.41%)
Citicorp $16.47 (+13.12%)
FreddieMac $6.83 (+29.85%)
WaMu $4.53 (+25.48%)
Wachovia $10.54 (+16.08%)
FannieMae $9.25 (+30.83%)
Lehman Bros $16.65 (+25.95%)
Note that all of these companies are THE major players in the mortgage market. In my area, the banks here account for over 50% of the loans funded and that is probably the case nationally too and obviously Fannie and Freddie own or guarantee over half of the outstanding mortgage debt in the country.
Now, I do not know if the risk is out of this segment of the market or not, but if you believe that there is always a message in the markets, this may be the best evidence that the paroxysms of pain in the financial and credit markets may well near an end.
It doesn’t mean that there may not be another IndyMac Bank type failure. It doesn’t mean that there won’t be more write-offs somewhere, but if you were looking for light at the end of the tunnel, this may be it.
Comment: it may take a long time to come out of that tunnel even if we see the light. Some areas may come out in 2010 or even later, but at least this is a nice peg to hang your hat on if you were looking for some good news.
Final comment: I think that for people who are looking at buying a home for their own use or for an investment income property, I think that your time has come. Seriously, this is the time to get off your hands and call your real estate agent and start looking for properties. IT’S A GREAT TIME TO BUY.
Randy Johnson Randy is a Credit.com contributor and seasoned mortgage expert. He writes about home buying, mortgage laws and real estate finance issues. He has financed over $1 billion in properties, is the author of How to Save Thousands of Dollars on your Home Mortgage and he is a feature columnist for Savvy Borrower.
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It’s a great time to buy — IF you have 10-25% CASH available for a down payment ! Banks are asking for much larger down payments and for jumbo loans, that down payment is even higher – as much as 30% in some areas.