The Treasury and Fed finally produced a plan to help the residential mortgage market, and this had an immediate impact on the Treasury markets as yields plunged and credit spreads narrowed significantly today.  30 year mortgages dropped as much as 40 basis points to well below 5.5%.

From the perspective of a real estate professional, as long as these rates can stay at these levels for a while, this should have a positive impact on the real estate market.  One major concern expressed recently on CNBC is that the commercial real estate market may follow the residential market into the abyss.  However, for some struggling real estate investors, a chance to re-finance at significantly lower rates should help their cause significantly.  Time will tell, but this is one important step that the real estate markets have needed.

The stock market greeted this news with a shrug, even though it may be the most important plan coming out of the Treasury since the crisis deepened in September.  However, considering that the market had reason about 10% in the previous two sessions, it was due for a bit of a break. 

Wednesday will be a light trading day ahead of the Thanksgiving Holiday.  Next week will be a big week for the market with a new employment report due out.  We will also have information on retail sales as the holiday shopping season officially begins on Friday.

Stay Tuned!

Scott Cole