Obama’s Refinancing Plan Causes Mortgage Bonds To Fall In Value

President Obama’s plan will make it easy for homeowners who are underwater on their mortgage to refinance into a low-interest mortgage.

This is pushing down the value of mortgage-backed securities and increasing pressure for a rise in mortgage interest rates, which is presumably the opposite of what President Obama wants.

Politicians plan. The market laughs.

Dow Jones reports: But unlike recent changes to the Home Affordable Refinance Program, the changes sought by Obama would likely require legislation that analysts said would have little chance of passing in an election year.
“MBS are only slightly underperforming Treasurys this morning indicating the markets are skeptical of any broad refinancing being approved by the FHFA or Congress,” said Bryan Whalen, a managing director and portfolio manager at TCW in Los Angeles.
Barclays Capital said it wasn’t raising its forecasts for mortgage-bond principal prepayments, noting the plan may be “dead on arrival” in Congress.

Read more: http://www.foxbusiness.com/news/2012/01/25/mortgage-bonds-fall-on-obama-refinance-plan/#ixzz1kUe7ha8k

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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