Good Tuesday AM from your Hometown Lender,

There is no economic news today other than a rate decision from the Bank of China..

They didn’t move rates, by the way. We have a bit of news starting tomorrow with the minutes from the last Fed meeting, Thursday is unemployment claims, and Friday is all about Fed Chairman Powell’s speech in Jackson Hole.

With not much data to share, here a couple of headlines…

The Chinese Government has decided to pull back support (funding) for home builders causing builders to cut pricing by 20% (to start) in what seems like a race to the bottom. The Chinese government is also going to buy vacant homes to help with the glut of properties on the market..

The interesting world of finance… sometimes it seems too easy.

The $13 billion that Elon Musk borrowed to buy Twitter is weighing on banks’ balance sheets. The seven banks involved in the deal, including Morgan Stanley and Bank of America, lent the money to Musk’s holding company to take Twitter, now named X, private in October 2022. Banks that provide loans for takeovers generally sell the debt quickly to other investors to get it off their balance sheets, making money on fees. The banks haven’t been able to offload the debt, leaving the loans stuck on their balance sheets for longer than every similar unsold deal since the 2008-09 financial crisis and resulting in write-downs that have hobbled the banks’ loan books.

There is an interesting op-ed from John Hope Bryant posted on CNBC regarding 40-yr mortgages. It is a nice concept and would stretch out payments and give some relief until… sellers raise prices as a result of higher demand and lower rates. Also with a 40-yr mortgage the first 15yrs of payments are almost all interest so no equity is built up in the loan for a long time.

Stay safe and make today great!