Morning Report: Freddie Mac sees mortgage originations hitting $3.2 trillion in 2021

Vital Statistics:

 

  Last Change
S&P futures 3798 27.3
Oil (WTI) 52.84 0.54
10 year government bond yield   1.12%
30 year fixed rate mortgage   2.88%

Stocks are higher this morning as more financial stocks report earnings. Bonds and MBS are down.

 

The upcoming week is pretty data-light, although we will get some housing data with housing starts, the NAHB Housing Market Index and Existing Home Sales. The Spring Selling Season will be starting in about a month or so, and we should see plenty of pent-up demand from last year. Existing home inventory is at record lows, and prices are rising.

 

Bank of America reported better than expected earnings, however revenues fell 10%. The Fed has loosened the reins on stock buybacks, and the company announced it intended to repurchase $2.9 billion shares. Separately, Goldman Sachs reported strong earnings.

 

Janet Yellen is scheduled to return to the Hill today for testimony about her new role as Treasury Secretary. Unsurprisingly, she is going to advocate for a lot of additional fiscal stimulus. Note that with the change of the administration, many Democratic lawmakers are suddenly interested in re-opening the economy.

 

Joe Biden nominated Rohit Chopra to lead the CFPB. It sounds like the Administration is going to focus on student loan servicing practices. I am sure that the Agency will also focus on mortgage servicing as well. Chopra is a well-known name in DC and was most recently at the FTC where he focused on market domination in the tech space.

 

Merrill Lynch is out with a bullish take on the 2021 economy, predicting that the most vulnerable parts of our population will be vaccinated by April and May, and earlier and larger stimulus package will help things as well. They are taking up their GDP forecast from 4.6% to 5%. Note the Fed is predicting 4.2% for next year. If historical patterns hold, we can expect the Fed to overshoot growth estimates for the next four years.

 

Freddie Mac is forecasting that originations will decline 20% from their all-time high of $4 trillion in 2021. $3.2 trillion is still a hefty number, and should allow for great times for the industry. They see mortgage rates averaging about 2.9% this year before rising to 3.2% in 2022. Freddie also sees home price appreciation leveling out to about 0.7% in 2021. With the current supply-demand imbalance, that seems unlikely.

32 Responses

  1. An example of Chinese market power from, of all places, Sweden. Sourced from The Economist.

    Sweden followed America in banning Huawei’s technology from its 5G infrastructure in October, citing security vulnerabilities. The firm challenged the ban, but Sweden’s highest administrative court threw out the appeal last week. Today Sweden’s telecoms regulator proceeded with an auction of the 5G wireless spectrum to network operators, none of which can use Huawei’s technology. One might think that Ericsson—a Swedish firm whose technology has become a popular alternative to Huawei as companies build their 5G networks—would be overjoyed. But the firm’s boss has reportedly lobbied Sweden’s foreign-trade minister to rethink the Huawei ban. The decision has given Ericsson greater market power at home, but it might result in reprisals from China, where its sales have recently boomed.

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  2. Interesting comment from Taibbi’s latest on where he’s coming from with his writing:

    “I spent most of my career worried about right wing policies, the Dick Cheneys of the world, because I thought they had more power and were succeeding in reworking American government in a scary way. Then with the post-crash period, I was focused on bankers and politicians who supported them – basically a bipartisan elite consensus. These days I definitely see a lot on the Trump side that worries me, but to me he represents a relatively isolated voter group, while his opposition (which includes most of the press) has most all of the institutional power, here and globally.

    It’s not about intelligence or intellectual agency, it’s about power and who has it. I’m just not as afraid of the people who stormed the Capitol as I am of Facebook, JPM, the NSA, the Pentagon, etc. I just can’t stop worrying about what they’re thinking.”

    https://taibbi.substack.com/p/how-much-did-the-culture-of-narcissism

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    • what is there to learn? It worked.

      Though I don’t think I am the only one who has checked out of culture.

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      • How not to be overtly entitled twats? How to not act like royalty and lord their entitled class membership over the peasants? “Let them eat cake” detachment, especially after a year of COVID and lockdown, seems like a poor choice.

        But the victors always feel entitled to celebrate I suppose.

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      • this was a four-year tantrum because somebody else stole their toy.
        and, if you’re reading the WaPo style section, don’t miss the coverage of Biden’s pocket square and well dressed he is.

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