Morning Report: Home price appreciation is accelerating 6/22/17

Vital Statistics:

Last Change
S&P Futures 2431.8 -1.8
Eurostoxx Index 387.6 -0.9
Oil (WTI) 42.9 0.4
US dollar index 88.8 -0.1
10 Year Govt Bond Yield 2.15%
Current Coupon Fannie Mae TBA 103.31
Current Coupon Ginnie Mae TBA 104.375
30 Year Fixed Rate Mortgage 3.92

Stocks are lower this morning as oil turns into a bear market. Bonds and MBS are up small.

Initial Jobless Claims rose 3000 last week to 241k, while the index of leading economic indicators rose again. The LEI report noted that pretty much everything is improving, except for housing and the manufacturing workweek.

Home Prices rose 0.7% in April, according to the FHFA House Price Index. On a YOY basis, they are up 6.8%. As inventory gets tighter, price increases are accelerating, which is a problem as house prices are now pretty stretched versus incomes. The West Coast is still experiencing close to double digit growth, while home price inflation in the Upper Midwest and Northeast lag the rest of the country.

Some Trump advisors are recommending that Janet Yellen be replaced when her term ends in February. Yellen is a dove, and Trump recently seemed to reverse his pre-election view on interest rates. As a general rule, politicians love dovish Feds, so this is unsurprising. Treasury Secretary Mnuchin says Trump “hasn’t given this much thought” since it is so far away. Among the other names being mentioned include Stanford’s John Taylor, Columbia’s Glenn Hubbard, and former Fed governor Kevin Warsh.

As rates have fallen, prepayment speeds have increased, which is generally good news for originators, but bad news for those who own servicing. Delinquencies have reversed their calendar-driven April rise as well, according to Black Knight Financial Services. In fact, loans 90 days down or in foreclosure hit a 10 year low.

The average closing rate for a mortgage inched up in May, according to the Ellie Mae Origination Insight Report. The typical FICO rose a point to 723, with an 80 LTV. The closing rate hit 70.4%.

What are the priorities for the MBA in the upcoming year?  Removing regulatory barriers to housing, GSE reform, GNMA servicing, and much more.

25 Responses

  1. Frist!

    Quick question regarding ACA and new replacement: any evidence that greater coverage as provided by ACA actually led to markedly superior healthcare outcomes, or would?

    Like

    • Yes, because science, and reasons. Why do you hate sick people?

      Liked by 1 person

    • you’re asking about value — or health outcomes relative to spending. the evidence for that is mixed at best.

      Like

      • Health outcomes relative to spending. I would expect there would be a financial benefit to being covered vs. not covered in any instance there was a significant healthcare expense, but I don’t really expect superior health outcomes in the aggregate. Yet the common PL meme is that the GOP is actively killing millions of people . . . “and that’s not hyperbole!”

        But I’ve been of the opinion that in most cases, the health coverage is likely to mean a day less sickness here, an avoided (but eventually treated) infection there, or dying on a Thursday rather than on Tuesday. My sense is that the benefits would have to be marginal to the point of being zero, in aggregate. There would be one guy who you might argue would have died from this or that without the coverage . . . but my guess most of those would be cancer patients, the rest transplants, and nobody seems to be suggesting Medicare coverage for cancer or transplants ala the universal Medicare we already have for dialysis.

        Like

  2. The MSM got their marching orders: Trumpcare is “mean”

    Like

    • It could be universal single payer, and some mechanism to make that happen without immediate bankrupting the nation would be referred to as “mean” and “cynical”. And characterized as a tax cut for the rich.

      Like

    • He decries politicians who blow hot and cold, yet insist the study must be wrapped up before an election in 2019. He calls them “small boys with toy cars, who become bored and move on”.

      Things are truly the same all over.

      I like the idea of a UBI, especially if other benefits are trimmed to pay for it. A caveat for me would be that all recipients of the UBI would have to demonstrate productivity, such as income from a part-time job or full-time job, or taxable independent contractor income, to keep it. Which would, of course, be considered “mean” and “cynical”. But I don’t see it happening in America for years and years.

      But I do see it happening, in the most expensive and counter-productive way possible. 😉

      Like

      • KW:

        I like the idea of a UBI, especially if other benefits are trimmed to pay for it.

        They won’t be. And if they were, they would just be reinstated at some later date.

        A caveat for me would be that all recipients of the UBI would have to demonstrate productivity, such as income from a part-time job or full-time job, or taxable independent contractor income, to keep it.

        Doesn’t that rather defeat the purpose of the ‘U” in “UBI”?

        Like

  3. Ezra Klein on the Senate bill:

    “The Senate GOP health bill in one sentence: poor people pay more for worse insurance
    It’s not complicated. Just cruel.
    Updated by Ezra Klein
    Jun 22, 2017, 11:58am EDT”

    https://www.vox.com/policy-and-politics/2017/6/22/15854614/senate-gop-health-bill-poor-pay-more

    An observation: if this becomes the standard talking point for Democrats – “poor people pay more for worse insurance” – watch for a collective yawn from the larger electorate, who really don’t care all that much about poor people when push comes to shove.

    Liked by 1 person

    • just so we all understand this: 350% of FPL for a family of 4 is …. $86,100

      or, you know, poor.

      Liked by 1 person

    • “Just cruel.”

      OMG. It’s not a cruel, it’s just not ideal for the people who get less for more (which happens to all sorts of people in all sorts of areas all the time. Happened to me, with my insurance, after the ACA: I’m now paying more for less).

      The hyperbole. I feel like this isn’t actually going to help the left in the midterms, though I know they think it will.

      It’s ironic. To me, they appear very much like Trump: their own worst enemies. Though even worser, as at least Trump, for all of his craziness, knew that “Make America Great Again” was a great campaign slogan, and opted for it over: “I’m With Him”.

      At least “Stronger Together” won out at the end with Hillary’s campaign, over the more straightforward “Stronger With You Conform and Obey”.

      Like

      • “The hyperbole. I feel like this isn’t actually going to help the left in the midterms, though I know they think it will. ”

        It’s not. The vast majority of the American electorate won’t even be affected by this bill.

        Liked by 1 person

  4. I absolutely do not have a problem with this. I consider it conscious uncoupling. Better than a civil war.

    https://www.the-american-interest.com/2017/06/23/californias-soft-secession/

    Like

  5. C’mon Republicans!

    We can kill more than this!

    Like

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