We were talking to MBS inventor Lew Ranieri this morning and he had some interesting things to say about rates. He noted that if Spain cannot solve its debt woes (I assume you saw the protests in Madrid last week) that bond holders worldwide may flock into Treasuries, which means rates would fall even further in the U.S. Will this happen? Time will tell – but any decline in mortgage rates would be welcomed. Then again, the problem isn’t really rates (as we all know) – it’s underwriting guidelines that have swung so severely the other way, making it impossible for hundreds of thousands of applicants to buy a house. No wonder, the subprime business might be on the way back…
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