Morning Report: Mortgage credit continues to tighten

Posted on July 9, 2020 by Brent Nyitray

Vital Statistics:

 

Last Change
S&P futures 3170 3.1
Oil (WTI) 40.84 0.21
10 year government bond yield 0.65%
30 year fixed rate mortgage 3.12%

 

Stocks are higher this morning on no real news. Bonds and MBS continue to ratchet higher.

 

Initial jobless claims fell by 99k to 1.314 million. Despite the improvement in the economy, many retailers who were struggling before the COVID crisis are still cutting jobs.

 

Despite the improvement in the housing market and the mortgage market, credit availability fell again in June, according to the Mortgage Bankers Association Mortgage Credit Availability Index. “Mortgage credit supply dropped again in June, as investors further reduced their willingness to purchase jumbo loans and those with lower credit scores,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Lenders are navigating a gradual economic and housing market recovery that is still facing headwinds from the ongoing COVID-19 pandemic. Credit supply has fallen over 30 percent since February – before the pandemic – with an 18 percent decrease in government loan availability, and a 57 percent drop in jumbo loan availability.” We will need to see the securitization market turn on before we get a meaningful return to jumbo and non-QM. Low FICO FHA will probably have to wait until forbearance ends.

 

Fed Head James Bullard sees unemployment dropping down into the 7% – 8% range in 2020.

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