Posts Tagged
‘mortgage rates’
by ilene - November 18th, 2010 4:00 pm
Courtesy of Mish
Curve Watchers Anonymous has a quick update on US Treasuries.
click on chart for sharper image
The yield curve is flattening, in a bearish way. A Bull flattener would be when yields are dropping across the board with yields on the long end dropping more than the short end.
In this case, 5-year and 10-year yields are up about 45-50 basis points from the low just after QE II started, while yields on 30-year treasuries are up only about 30 basis point.
Daily Snapshot
You can see this easily in a daily snapshot from Bloomberg.
click on chart for sharper image
As I have pointed out before, this action is not at all usual. It is an artifact of everyone front-running the Fed’s announcement of Quantitative Easing purchases, then selling the news.
Yields are higher across the board than in August when the Fed first hinted at another round of QE.
Mortgage Rates Climb
Curve Watchers Anonymous also points out that mortgage rates are on the rise
Mortgage rates are a quarter point higher than a month ago and back to where they were three months ago, even as housing slips further into the gutter. Please see Bernanke Claims QE II will Create 700,000 to 1 Million Jobs; Where? Mexico, Peru, China for more on mortgage applications and mortgage rates.
Mike "Mish" Shedlock
Tags: bonds, Housing Market, Interest Rates, mortgage rates, QE2, yields
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by Chart School - September 24th, 2010 2:19 pm
Courtesy of Doug Short
A few minutes after posting my latest Treasury Yield Snapshot, Claire at mortgagerates.info sent me this rather opinionated graphic of the Federal Funds Target Rate and how it played out in mortgages.
Infographic by Mortgage Rates
[Click on chart to enlarge]
Tags: Alan Greenspan, Economy, Infographic, mortgage rates
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by ilene - September 7th, 2010 5:53 pm
Courtesy of Reggie Middleton
This is part one of my update on residential real estate mortgages, whose credit conditions have seen a marked improvement over the past year. Of course (yes, you know there is always a but), I believe the improvement is the result of the rampant government intervention in the mortgage markets. As we shall see in part two for this update, even with rampant intervention some of the major mortgage institutions are so sick as to appear to be beyond mere assistance. Brace yourself for Financial Meltdown 2.0, open source edition.
Is it really a Housing Double Dip if Conditions Never Stopped Getting Worse?
Many analysts have speculated housing would reenter a “double dip” courtesy of falling home prices, decreasing home sales, increasing housing inventory, and other issues that have not been resolved since the collapse of the housing market began nearly three years ago. Inevitably, housing policy at the federal level has completely failed to support any regeneration of demand.
Mortgage Rates Can’t Find Rock Bottom: WSJ
- The Freddie Mac survey of 30 year mortgage rates has shown new record lows in rates for 11 straight weeks
- 15, 10, and 5 year rates have also continued their free fall as employment data fails to ease fear in the housing market
Figure 1: Courtesy of Freddie Mac
Figure 2: Courtesy of the Kansas City Federal Reserve Branch
Figure 3: Courtesy of the National Association of Realtors
Housing Prices Climb amid Falling Home Sales (the government’s hidden bid at work): CBS
- Foreclosures continue to increase, July home sales fell by 27%, employment conditions are not getting better, and home prices found a way to rise 7%
- Robert Shiller claims the San Francisco market is “booming” after climbing 21% since 2009 (but don’t ask about the record drops in 2008)
- If you are wondering where your unemployed neighbor is spending all of his free time, check and see if there is a distressed homeowners convention in town
Figure 4: Courtesy of the National Association of Realtors
Federal Reserve Still Watching Foreclosure Data: International Market News
- Average property vacancies have increased from 114 days in 2006 to 954 days in 2010
…
Tags: double dip, Economy, employment data, home prices, home sales, housing inventory, Housing Market, housing prices, mortgage rates, Residential Real Estate
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by ilene - July 30th, 2010 1:50 am
Courtesy of MIKE WHITNEY writing at CounterPunch
On Tuesday, the 30-year fixed rate for mortgages plunged to an all-time low of 4.56 per cent. Rates are falling because investors are still moving into risk-free liquid assets, like Treasuries. It’s a sign of panic and the Fed’s lame policy response has done nothing to sooth the public’s fears. The flight-to-safety continues a full two years after Lehman Bros blew up.
Housing demand has fallen off a cliff in spite of the historic low rates. Purchases of new and existing homes are roughly 25 per cent of what they were at peak in 2006. Case/Schiller reported on Monday that June new homes sales were the "worst on record", but the media twisted the story to create the impression that sales were actually improving! Here are a few of Monday’s misleading headlines: "New Home Sales Bounce Back in June"--Los Angeles Times. "Builders Lifted by June New-home Sales", Marketwatch. "New Home Sales Rebound 24 per cent", CNN. "June Sales of New Homes Climb more than Forecast", Bloomberg.
The media’s lies are only adding to the sense of uncertainty. When uncertainty grows, long-term expectations change and investment nosedives. Lying has an adverse effect on consumer confidence and, thus, on demand. This is from Bloomberg:
The Conference Board’s confidence index dropped to a 5-month low of 50.4 from 54.3 in June. According to Bloomberg News:
"Sentiment may be slow to improve until companies start adding to payrolls at a faster rate, and the Federal Reserve projects unemployment will take time to decline. Today’s figures showed income expectations at their lowest point in more than a year, posing a risk for consumer spending that accounts for 70 per cent of the economy.
“Consumers’ faith in the economic recovery is failing,” said guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, whose forecast of 50.3 for the confidence index was the closest among economists surveyed by Bloomberg. “The job market is slow and volatile, and it’ll be 2013 before we see any semblance of normality in the labor market." (Bloomberg)
Confidence is falling because unemployment is soaring, because the media is lying, and because the Fed’s monetary policy has failed. Notice that Bloomberg does not mention consumer worries over "curbing the deficits". In truth, the public has only a passing interest in the large…
Tags: Bernanke, consumer sentiment, default, emergency facilities, Federal Reserve, Goldman Sachs, housing demand, Labor Market, Lehman Brothers, local governments, mortgage rates, public works, unemployment, Wall Street, Wall Street profits
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by ilene - May 27th, 2010 1:30 am
Courtesy of The Pragmatic Capitalist
I had to chuckle at the headline on Yahoo Finance throughout much of Monday’s trading session:
It’s an accurate headline. Mortgage rates have declined in recent weeks as U.S. government bonds have surged. But the actual article was filled with very dramatic certainties (most of which were inaccurate and/or misleading). For instance, the excellent Mark Zandi of Moody’s was quoted saying that we are seeing a once in a generation buying opportunity in real estate:
“It’s the best time in our generation to buy. It may be the best time in any generation. Mortgage rates are so low and with homes prices down and lots of inventory, you couldn’t pick a better time to buy or re-finance.”
Wow, sounds like we should all go out and buy houses, right? It gets rosier though. The article details why we should all run out and buy houses immediately:
But the decline in rates probably won’t last long, analysts say. So homeowners need to move fast.
“I think they won’t last much longer than a month or two at the best,” says Lawrence Yun, chief economist at the National Association of Realtors. “I can see them going up to 5.5 percent by the end of June if not sooner.”
Move fast, huh? Prices are low. Rates are going back up. That sounds pretty convincing. If interest rates (and home prices) are only going to be low for a brief period then we should capitalize on that opportunity. Right? But then the article takes a dramatic turn for the worst when they try to explain the actual fundamentals behind the rising interest rate argument:
“The US is fortunate now that there’s no pressure on interest rates,” Yun goes on to say. “But going forward, higher rates will be needed for financing the debt.”
(Screeching sound). Uh oh. Here we go again with the hyperinflation, the USA is dying, the dollar is finished, higher interest rates will be needed to “finance our debt”, argument. The dots are easy to connect in this article. In essence, the article implies that interest rates are at record lows because investors have sought the safety of government bonds and mortgage rates have subsequently declined. What they fail to expand on is why interest rates have been declining in recent weeks when, according to…
Tags: Ben Bernanke, bonds, debt, Economy, Interest Rates, low interest rates, Main St., mortgage rates, private sector, public section, Wall St.
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by ilene - January 8th, 2010 1:50 am
Courtesy of Tom Lindmark of But Then What
No one covers the residential housing market like Calculated Risk and he has been doing a great job of following what appears to be mounting concern about the Fed withdrawing from the MBS market. Tonight he has a compendium of thoughts on the subject, all verging more or less on terror at the prospect.
I’ll let you click over there to take a quick glance at the various concerns. For his part, the blog’s author has been pretty steadfast in his belief that when the Fed does withdraw the impact on interest rates is going to be in the neighborhood of 35 basis points. Disagreeing with him is perilous business but in this case, I think he might be too optimistic.
Obviously, the impact is not one that will occur in isolation but will be influenced by the general state of the bond market, inflation expectations and the general state of the housing market, particularly the outlook for further foreclosures. Having said that, I think that it could easily push rates up by 50 to 100 bps.
There hasn’t been an established market for residential MBS since the bottom fell out of everything and there seems little reason to suppose that investors, especially overseas investors, are going to rush back into the market absent some fairly generous risk premium. It’s not like there is a dearth now or for the foreseeable future of US government securities which carry less baggage than MBS.
Specifically, the value of the implicit guarantee could be substantially diminished were the economy to start heading in the wrong way thus necessitating further deficit accumulation. It’s an Armageddon scenario that the US would find itself so strapped for financing that it stopped honoring anything other than direct obligations of the government but, if we’ve learned anything the past couple of years it is that what once seemed beyond possible isn’t necessarily so.
I do agree with Calculated Risk’s assessment that the Fed will at least try exiting the program and will bounce right back in if things go awry. At the very least, it’s going to be a great test of the degree to which the markets have returned to normal and give us
…
Tags: Calculated Risk, MBS market, Mortgage Interest Rates, mortgage rates, the Federal Reserve
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by ilene - November 22nd, 2009 6:16 pm
Courtesy of Tom Lindmark at But Then What
Calculated Risk points to an interesting but short article at Bloomberg by Meredith Whitney in which she postulates that once the Fed withdraws its support for the mortgage backed securities market, mortgage rates will move up and the banks will be faced with more writedowns.
CR plots the historical spread of of the 30 year mortgage versus the ten year Treasury and comes to the conclusion that the Fed’s intervention has amounted to somewhere around a 50 BP subsidy so far. He then postulates that we could expect to see rates increase by this amount once the Fed exits the market.
Now let me say that I bow to no one in my admiration for CR. When stretched for time, it’s the only blog I read and it’s always the first blog I turn to. The author gets the data and then reaches well thought out conclusions and doesn’t seem to let personal bias intrude on his analysis. Having said that, I think he may be underestimating the potential effect on rates that may occur when there is no more Fed support.
If you read me often you will have seen this quote before. From George Will, “History tends to repeat itself until it doesn’t.” That is the problem that I have with CRs chart on this one. It presupposes that the world hasn’t changed and that the historical relationship between Treasuries and mortgage rates will persist.
Maybe it will and maybe it won’t. It might not because the world has changed. We’ve not seen before the unprecedented political interference in the market for mortgage securities that we have witnessed over the past 18 months. Contract law has been stretched to the point of breaking and what was normally considered standard procedure for resolving mortgage defaults has been turned on its head.
I have no idea as to whether or how much investors have been harmed by government actions and I suppose that no one at this point in time can generate any verifiable numbers. I’m not sure that, in fact, that makes much difference.
When the Fed does withdraw, the risk premium that investors demand is once again going to be subject to market discipline. Now it might not
…
Tags: 30 year mortgage, Calculated Risk, Meredith Whitney, mortgage rates
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by ilene - July 19th, 2009 12:08 pm
Courtesy of Edward Harrison at Credit Writedown
While Tim Geithner is out in the Middle East making the obligatory rounds, professing support for a strong U.S. dollar, investment strategists are wondering aloud whether a weak U.S. dollar is really what the U.S. government wants. David Rosenberg put out the following note over at Gluskin, Sheff.
It is the second anniversary of the credit crunch and after all of the fiscal and monetary policy initiatives, the best we get are green shoots and now that story is getting stale. Go back two years and you will see that the funds rate was 5.25%. Today it is zero. The fiscal deficit was 2.0% of GDP two years ago. Today it is 13%. Mortgage rates were 6.5%. Today they are 4.7%. Homeowner affordability with all the government measures is 70% stronger today than it was then too. The Fed’s balance sheet then was $850 billion. Today it is bloated at $2 trillion. The government has tried just about everything. Or has it? What if we were to tell you that the one policy tool that is unchanged since the summer of 2007 is… the U.S. dollar? It is exactly the same level now, on any trade-weighted measure, as it was back then. The greenback is struggling at the 50-day moving average, and this could well be the next policy shoe to drop.
We have seen huge fiscal and monetary stimulus. We have seen the Fed buy up toxic assets and bloat its balance sheet to unprecedented levels. There have even been mammoth changes in the affordability of homes, largely due to lower mortgage rates (and declining values). In short, everything has been done in the last two years to spur growth in America – that is everything except devaluing the greenback.
With unemployment still rising and Congress’s biannual election season coming up in no time, it would be quite tempting to orchestrate a devaluation in order to get a short-term boost.
As we said above, the U.S. government has practically exhausted all of its policy options … except for one; the U.S. dollar. It is the only policy tool that has not budged one iota since the crisis erupted two years ago. As we mull this over, we recall all too well this great book that a client referred us
…
Tags: Congressional elections, David Rosenberg, Dollar, GDP, Housing, mortgage rates, strong U.S. dollar, Tim Geithner, unemployment
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site