Morning Report – CoreLogic Market Pulse -2/13/13

Vital Statistics:

  Last Change Percent
S&P Futures  1518.8 2.6 0.17%
Eurostoxx Index 2656.9 8.1 0.30%
Oil (WTI) 97.85 0.3 0.35%
LIBOR 0.29 -0.002 -0.68%
US Dollar Index (DXY) 79.98 -0.125 -0.16%
10 Year Govt Bond Yield 2.00% 0.02%  
RPX Composite Real Estate Index 193.5 0.3  

Markets are up slightly after retail sales came in as expected. Ex auto and gas, they disappointed. However, there was some fear that the Jan 1 tax hikes would curtail consumer spending.  At least this data point shows it hasn’t.  Although to be fair, a +.1% increase is nothing to write home about. Mortgage applications fell. 

CoreLogic’s latest Market Pulse previews 2013. They predict that the refi boom is over, but it will be some time before the purchase market comes back. They note that 2012 census data indicates that household formations increased by 1 million, which is getting back to normalcy.  As I have said before, there is a lot of pent-up demand here, as the low household formation numbers of the last 5 years have been driven by economic weakness, not demographics. They do forecast that margins may get compressed as lenders fight over a declining amount of activity. That said, you can’t turn a refi shop into a purchase shop overnight. They also do an interesting analysis of the expected effect of QM loans. Near term, it will probably increase the profile of the GSEs.  Longer term, it will greatly increase performance characteristics.  Anyway, lots of good stuff in here.  RTWT.

27% of borrowers who refi are shortening their terms, according to Freddie Mac.  Cash-out refis account for just 16% of refinances, while cash in refis have jumped to 39%.  Ironic that consumers are getting more conservative when the Fed is using every tool in its toolbox to get consumers to do the exact opposite. 

Looks like the sequestration cuts are going to happen.

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