Morning Report: Mortgage applications fall 8/2/17

Vital Statistics:

Last Change
S&P Futures 2474.8 2.5
Eurostoxx Index 379.4 -0.9
Oil (WTI) 49.2 0.0
US dollar index 86.0 0.1
10 Year Govt Bond Yield 2.28%
Current Coupon Fannie Mae TBA 102.93
Current Coupon Ginnie Mae TBA 103.81
30 Year Fixed Rate Mortgage 3.95

Stocks are up this morning after Apple earnings beat estimates last night. Bonds and MBS are flat.

We will have some Fed-speak later this afternoon, but with the Fed on hold for the moment, it shouldn’t be market-moving.

Mortgage applications fell 2.8% last week as purchases fell 2% and refis fell 4%. Mortgage rates were more of less flat last week after the FOMC maintained interest rates and released a somewhat dovish statement.

The US economy added 178,000 jobs in July, according to the ADP payrolls number. The street is looking for 178,000 jobs in Friday’s employment situation report. Meanwhile, the Gallup jobs creation index ticked up to a record high.

CoreLogic’s mortgage fraud index ticked up to a new high. This is largely a reflection of 2 things: first, the index didn’t exist during the bubble days, and second it reflects the movement to a more purchase dominated market, which has more moving parts and opportunities for fraud. They note two schemes that are gaining traction right now. The first is the reverse occupancy scam, where a borrower claims they are buying a property to rent out. Future rental income is used to qualify the borrower. Once the loan is closed, the borrower moves in and doesn’t rent it out. The second is a pitch to investors in high cost areas to buy Rust Belt properties sight unseen and have the company manage them. Of course the buyers are paying inflated prices.

Multigenerational homes are making a comeback as kids either move back in with their parents or bring their aging parents into their homes. This is probably a temporary phenomenon driven by high real estate prices and a softish economy, however it is also cultural as multi-generational living is common in Asia. Don’t think the Waltons though. These new homes often have separate entrances, multiple kitchens and more than one master bedroom.

We might see a debt ceiling fight this fall, as Treasury has enough money to get through September. Treasury Secretary Steve Mnuchin is asking for a clean debt ceiling hike from Congress, but it probably won’t be that easy. This issue is probably one of the reasons that Sep Fed Funds futures are pricing in a negligible chance for a rate hike next month.

The MBA’s Dave Stevens weighs in on the state of the housing market. Biggest issue: tight credit and slow wage growth.

19 Responses

  1. Worth noting:

    “First human embryo editing experiment in U.S. ‘corrects’ gene for heart condition
    By Ariana Eunjung Cha
    August 2 at 1:00 PM”


  2. There must be good money to be made in Berkeley to stay and put up with these douche-nozzles.


  3. I think Cotton’s immigration proposal goes in a constructive direction in significant parts. Moving away from the unbounded family definitions to “spouse and minor children” is one. The second is placing the priority on needs in the general economy.

    I think it moves in the wrong direction in three ways. First, the overall number of immigrants is cut in half. Once we are permitting by economic need, we don’t need to lower the overall limit, because we will be, like the Ivy League, admitting the folks we want. Second, we don’t need to unduly emphasize “English” – skilled folks, like the target audience, are quick learners, as many of us know from the histories in our own families. Third, farm and ranch workers should be considered a category of need. Rural populations are not enough to support agriculture in many parts of the country. EDIT – the Rs are going to do a Guest Worker bill for AG, later, according to Rep. Lamar Smith.

    If the proposal would open a rational debate [to me, that means a debate over the unbounded family definitions vs. the skill sets of immigrants] that would be great. Unfortunately, few Ds are willing to consider limiting the unbounded family classifications.

    I am afraid the bill will be DOA, when it has some promise, if it would be committed to Regular Order and lots of testimony.


  4. Hi Guys! Just checking in to say Hi and see if you’re all up for another year. My payment for the domain is due in September and I’m happy to keep you all blogging! Looks like you’re going strong still!


  5. Really interesting piece about Trump and Afghanistan. I couldn’t find fault with Trump in it.

    This paragraph’s a stunner though,

    He also said acquiring mineral rights in Afghanistan is complicated and potentially costly because it would require the type of security the U.S. has been unable to achieve, as well as a workforce and access to a port to ship the materials.

    Yet, somehow,

    China purchased mineral rights in Afghanistan a decade ago, an investment the U.S. supported at the time. Beijing has since had teams mining copper outside of Kabul.


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