Morning Report: Mortgage credit tightens again

Vital Statistics:

S&P futures3,6168.75
Oil (WTI)89.84-1.51
10 year government bond yield 3.93%
30 year fixed rate mortgage 6.81%

Stocks are lower as the UK continues to support its bond market and supply chain issues impact the chips market. Bonds and MBS are down.

The upcoming week has a lot of important data, especially with the consumer price index on Thursday. We will also get the FOMC minutes on Wednesday. We will also get the University of Michigan Consumer Sentiment data and retail sales on Friday.

Third quarter earnings season kicks off this week with the big banks all reporting late this week.

Small Business Optimism improved in September, according to the NFIB Small Business Optimism Index. Inflation remains the biggest problem, however fewer small business owners are raising prices. Jobs remain tough to fill, and expectations about the future declined.

The small business economy seems to be waiting for the other shoe to drop, as they expect that the economy will weaken as the rate hikes begin to impact the economy. We are looking at another 75 basis points in tightening at the November meeting, and the 225 in hikes since June will begin to have their effect in the coming months. As a general rule, monetary policy acts with a 6-9 month lag, so we are only beginning to feel the impact of these rate hikes. It will get worse before it gets better.

Mortgage credit continues to tighten and has fallen to a 9 year low, according to the MBA. Much of the impact is being felt at the low end of the credit spectrum. We continue to see lenders shrink their FHA footprint and take defensive measures ahead of a potential recession.

“With the likelihood of a weakening economy, which would lead to an increase in delinquencies, there was a smaller appetite for lower credit score and high LTV loan programs, along with a reduction in government streamline refinance programs,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “As mortgage rates have more than doubled over the past year, resulting in a drop in refinance activity, lenders have worked to reduce excess capacity and costs by eliminating underutilized loan programs. All the component indices declined last month, with most of the indices falling to their lowest levels in over a year. In particular, the government credit availability index has declined in seven of the last eight months to its lowest level since April 2013.”

26 Responses

  1. This is funny


  2. Politically I am conservative, but I believe in the Successor Ideology.


  3. I hadn’t paid any attention to the Arizona governor’s race, but recently I stumbled upon a couple of videos featuring Katie Hobbs. I am a bit bewildered that she is a serious candidate for office. When watching her, I was reminded of a certain type of grade school teacher I would occasionally run across in parent/teacher meetings, the kind who was completely intimidated by other adults and could only convey an air of authority to kids. I don’t understand how anyone is taking her seriously. Is she really the best the D’s can find?


    • Well, it’s not like Herschel Walker is a terribly impressive candidate.

      This is interesting vis-a-vis the Arizona governor’s race.


      • The left is overthinking this. They are in abject denial over the unpopularity of their combination of wokeness and censorship.


      • jnc:

        Well, it’s not like Herschel Walker is a terribly impressive candidate.

        As unimpressive as Walker might be, I can still understand why he is taken seriously as a candidate…he is a celebrity with a ton of name recognition in Georgia.

        But that aside, I am sure there are many candidates for many offices in many states that are not impressive in their own way. I am not sure why that fact is relevant to my impression of Hobbs.


        • “I am not sure why that fact is relevant to my impression of Hobbs.”

          My point is that this statement applies just as much to the Republicans this cycle:

          “Is she really the best the D’s can find?”

          See McConnell’s comments on “candidate quality”.


        • jnc:

          My point is that this statement applies just as much to the Republicans this cycle

          I suspect it applies to some candidates of all parties in every election.

          Still, the attractiveness of Hobbs, even to Democrats, is uniquely mystifying to me. To repeat myself, I can understand why R’s in Georgia would vote for Herschel Walker over other ostensible R candidates, even if he is unimpressive in some ways. I have no idea why a D would vote for Hobbs vs other D’s.


        • Not sure how she got there, understand how Walker got where he is, but they are both at the point where for most partisans the only relevant issue is their brand affiliation.


        • KW:

          but they are both at the point where for most partisans the only relevant issue is their brand affiliation.

          Well that I get. I am not bewildered by why D’s would vote for her over Lake, or any other Republican rival. I am bewildered why D’s selected her in the first place.

          Like I said, I wasn’t really paying any attention to AZ, so maybe there is a reasonable explanation. I just don’t know what it is, and I was surprised at how meek and incompetent she appeared to be as a politician.


        • If it was via primary (I don’t have any idea who she ran against) could have been low turnout, friends-and-family voting, most name recognition in a field of unknowns.


      • And ironically, the establishment boosted that signal by proving that we considered him utterly anathema, absolutely beyond the pale. We thought we were helping to minimize the threats Trump posed to the system

        McArdle has become such a disappointment to me since Trump. Obliviously she doesn’t have to embrace him but she has identified herself with the Establishment for, I’m assuming, monetary reasons. The piece pre-supposes that the so called norms were/are unalloyed good and that the Washington Establishment’s goals and decisions are also virtuous. It doesn’t seem to occur to her that many voters see Washington Establishment as entirely corrupt and only self-dealing. McArdle paints herself and her fellow Washingtonians as some sort of benign control entity rather than a means for voters to effect change.

        What happened to McArdle’s contrariness? All in all she’s become very Goldbergian.


        • I believe in this, and its been tested by research

          He who fucks nuns, will later join the church


        • “We thought we were helping to minimize the threats Trump posed to the system, but the very vehemence of our rejection might actually have increased his power.“

          I mean, really. Did she think of this herself? Good god the ignorance from the snobbish elitist class of people who feel it is their god-given right to tell the peasants not only what they should things but must think is staggering.

          “Pessimistically, there might be little hope of a Trumpian populism without Trumpian savagery and Trumpian attacks on core democratic institutions”

          I think—again for these crafters of words charged with communicating the facts—the phrase “core democratic institutions” is being asked to do far too much work.

          What institutions? How are they attacked? Why is that an attack on core democratic institutions? Do people in opposition to Trump ever attack “core democratic institutions”? What is they actual risk to “core democratic institutions”? Is one thin a threat when done by Trump or Republicans but not when the identical thing is done by Democratics? If not, why not?

          Why should we should just accept the idea that Trump or Trumpism (neither of which I’m for, broadly speaking) represents a unique threat to “core democratic institutions” that are also almost always left undefined.

          Because when defined the role the Democrats have played and are playing in the exact same ways can be pointed to, and that’s not good for the narrative.

          Which is not exculpatory of Trump, to be clear, just damning of all politicians but even more so the press.


      • “Like most of my colleagues in the media, I was astonished to find that this only made his voters love him more.”

        The lack of self-awareness and the over-abundance of self-importance is flabbergasting.


      • “the only way to signal the kind of loyalty his voters are demanding is to do something his opponents will consider completely unforgiveable.”

        Honest question: what can a Republican do other than align themselves 100% with the Democrats that they won’t find unforgivable?


    • Another piece on Arizona. This could make for an interesting 2024 Republican primary season.

      “Trumpism Has Found Its Leading Lady

      The Republican candidate for Arizona governor not only won Trump’s endorsement but has emerged as his most talented emulator. Is Kari Lake the new face of the MAGA movement?

      By Elaine Godfrey”


      • My question is……………Is Trumpism what we actually want? I know I don’t, but what do you guys want or envision for the future?


        • Uh, no. At this point I’d like to see Trump go away. Obviously I don’t want what the Democrats are selling but I also don’t want any cult of personality (whether it’s a Trump or an admittedly more polished Obama).

          I like much more of what happened under Trump policy wise than under Biden, Obama or Bush (I’m okay with a lot of the Clinton-Gingrich era).

          But no, no interest in political personality cults. Which is what Trumpism is. It’s not a political philosophy that leads to coherent policy choices.


        • lms:

          Is Trumpism what we actually want?

          I don’t know what you would characterize as “Trumpism”, but I can say that I do not want Trump himself. Like Kevin I would like him to go away. Of course, I would like it even more if pretty much every single Democrat would go away, because I care most about ideas, not personas, and even the D’s with unobjectionable personas want to implement despicable and dangerous ideas.


        • Concur. I despise the cult of personality, don’t care who the politician is. However, suggesting (as the left often does) that the only solution to Trump’s cult of personality is to surrender, elect only Democrats, and also agree with them on everything is definitely the wrong answer.


        • In a perfect world, Trump would go away.

          But in the imperfect world we have today, where we have to choose between Trumpism and the Nurse Ratched Woke Left world, I prefer Trumpism as the lesser of two evils.


    • “Is she really the best the D’s can find?”

      Competent and charismatic people can do lots of things and being a politician is not attractive to most of them.


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