Wall Street and the real estate market are intricately linked. The credit squeeze and liquidity crunch on Wall Street is having a direct impact impact on the real estate market. Sometimes this impact can be immediate.
Who do you think was packaging, selling all those Mortgage backed securities and Mortgage credit derivatives? Why do you think rates on jumbos went jumped recently, resulting in further squeeze on the housing market? Those big banks reporting earnings will be a bell weather on how the mortgage meltdown has impacted them. MBS investors will be further risk averse if news looks bad. Who will buy the home loans? Countrywide certainly can’t hold them on the books.
Your adjustable mortgage rates are likely linked to LIBOR. The treasury yields generally track closely to the 30yr fixed mortgage rates. A flight to safety with people dumping shares results in lower treasury yields.
Most of the recent Wall Street volatility is linked very closely with the problems in housing.
