Happy Spring!
With Spring Break and busy workload, I've neglected posting for a while, but nice to be back on a normal schedule and having time to write a bit.
Every once in a while, I learn things that absolutely blow my mind (for better or worse). A recent article on CNBC certainly got my attention to that end.
Below is a link to the Article related to Chinese owned mortgage-backed securities and the potential risks they pose to the US Mortgage and housing markets.
As usual, I'm provide what I see as the important highlights and give my overall take at the conclusion:
1) At the end of January, Foreign Countries owned 15% of all Mortgage-Backed Securities in the US according to Ginnie Mae;
2) If China were to sell, it would likely spook the market and send mortgage rates higher;
3) The Fed Reserve is currently letting the MBS foll off of its portfolio in an effort to shrink its balance sheet.
Weitz - Call me ignorant, but I had no idea foreign countries owned such a large share of our MBS market. Furthermore, I can't fathom why the fed would be reducing its portfolio with obvious weakness in the market at the moment. This is just more fuel to the fire that i) rates will likely remain high for the indefinite future; 2) this coupled with increasing inventory poses trouble for many areas of the country.
It sure feels like a house of cards to me at the moment. Time will certainly tell.
For information related to Snohomish County Commercial Real Estate or Snohomish County Real Estate Investments, feel free to reach out any time.
Scott Weitz
Scott@WeitzCommercial.com
T: 206-306-4034
108 Union St
Snohomish, WA 98258
