February 13, 2012
In January, Hostess Brands, Inc. filed for bankruptcy protection. This is the second time in three years the makers of our beloved-but-bad Wonder Bread, Ding Dongs and Twinkies has filed, a sign that the company continues to struggle for survival. So what does this turn of events have to do with the mortgage lending industry?
Wonder Bread and Hostess snacks are iconic, they’re engrained in the American culture. While they’ve become objects of jokes and science projects (yes, Twinkies have a shelf life of several years), they nonetheless symbolize Americana, much like a home does with the American dream. We can’t imagine life without these comforts, yet the world as we once knew it and believed indelible has changed dramatically the past few years.
Today we live in ever-changing and unpredictable times. At the beginning of the year, financial forecasters gave their best-guess as to whether or not interest rates would go up in early 2012 and many determined they would. That didn’t happen. Rates are lower than ever now.
The bottom line is that there are too many variables in place that could impact rates, including the ongoing European financial crisis, inflation at home, and the possibility of another Quantitative Easing which essentially tries to stimulate the economy by increasing the money supply. The November elections are perhaps the biggest unknown.
It’s a wait-and-see year so we go with what we have at the moment. With interest rates remaining historically low for a few years now, we need to keep in mind that what we’ve come to take for granted (the low rates) may not always be there. Just like Hostess. And while we don’t know if it’s the twilight for Twinkies or the brink of rising interest rates, they’re both here today. Grab them while you can!