In 2008, there was a run on cash. This run on cash impacted the treasury, bond and Mortgage Backed Security markets which is typically a safe-haven for dollars to go in a time of panic or crisis.
We are seeing the exact same lock-up or freeze with regard to mortgages today as we saw in 2008.
As such, the Fed will need to intervene with even more than they already have ($200b on Sunday of the $800b package) to unlock or THAW this credit freeze. There is no way that a 4.875% 30 year fixed will be ignored by the Federal Reserve as a normal market fluctuation, that cannot and will not happen. The Fed has unlimited amount of funds at its disposal, but is currently focused on banking relief to ensure confidence in our banking system. Very quickly they will move to assist us in the mortgage industry, it is only a matter of time.
Pivot advise our clients to wait this out. This WILL unfreeze and it will be done VERY soon as the entire industry is currently dealing with the same circumstances as we are seeing.
The lesson learned after 2008 was very simple, and you are seeing it be acted out right before your eyes: DO NOT WAIT TO INJECT LIQUIDITY INTO MARKETS. The Fed will act to ensure that this $3 TRILLION ($3,000,000,000,000) market does not lock up or shut down.