That mortgage spike
May. 29th, 2009 10:53 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
solarbirdThat mortgage spike was ugly, by which I mean, "Scotty, what've we got left?!" ugly.
Karl Denninger has a couple of interesting tables, and also separately talks about the long Treasury bond. Mortgage-backed securities people are already talking about Black Wednesday. Mish Shedlock gets permission to share a report from Mark Hanson at the Field Check Group, normally subscriber-only:
Almost 13% of mortgages outstanding are in distress, with 3.85% in foreclosure, and another 9.12% at least one payment past due - more than 1:8. Worse, "between 65% and 75% of modified subprime loans will fall 60-days or more delinquent within 12 months of the loan change," reports Fitch. And the refi rug just got yanked, at least for the moment. We'll have to see whether it gets put back.
Oil is up to $65.60/barrel. Consumer confidence numbers are a little better, but mostly indicate people think there's nowhere further down to go. GM has dropped below 80¢/share as bankruptcy awaits, and reports say that 14 plant closures will be announced on Monday. First-time jobless claims were 623,000 last week, 13,000 less than the week before. Continuing claims jumped again to set another new record. First-quarter GDP for the US was revised to a smaller loss of 5.7% annualised, but May numbers for the Chicago area were unexpectedly weak. Treasuries have rebounded a bit from Wednesday and Thursday action, but not completely. The US dollar index is off sharply, at 79.4. The Baltic Dry Index has returned to normal (pre-spike normal, anyway) territory. This is healthy.
Japan's factory output jumped rather sharply in April, a positive surprise, despite a massive y-t-y drop in automobile production and exports.
That's all for now, I've got a market to play this afternoon. Good luck.
Karl Denninger has a couple of interesting tables, and also separately talks about the long Treasury bond. Mortgage-backed securities people are already talking about Black Wednesday. Mish Shedlock gets permission to share a report from Mark Hanson at the Field Check Group, normally subscriber-only:
With respect to yesterday’s episode in the mortgage market -- yes, it is as bad as you can imagine. Yesterday, the mortgage market was so volatile that banks and mortgage bankers across the nation issued multiple midday price changes for the worse, leading many to ultimately shut down the ability to lock loans around 1pm PST. This is not uncommon over the past five months, but not that common either. Lenders that maintained the ability to lock loans had rates UP as much as 75bps in a single day.That's a big deal for housing, which still matters quite a bit - and it's just as we're heading into the second big wave of mortgage resets. Thursday did not correct the plunge/spike materially, but there is some early improvement today. eta: Somebody just started doing a lot of buying mid-day. MBS traders are speculating it's (generally anticipated) Fed action, but that's speculation. Volume is thin but pricing is definitely up, which pushes interest rates down.
...many of these ‘applicants’ with loans in process were awaiting the magical 4.5% rate before they lock -- a large percentage of these suddenly died yesterday. To make matters worse, after 90-days much of the paperwork (much taken at the date of application) within the file becomes stale-dated and has to be re-done with new dates -- if rates don’t come down quickly many will have to be cancelled out of the lender’s system. To add insult to mortal injury, unless this spike in rates corrects quickly, a large percentage of unlocked purchases and refis will have to be denied because at the higher interest rate level, borrowers do not qualify any longer. For the final groin kicker, a 5.5% rate just does not benefit nearly as many people as a 4.5%-5% rate does. Millions already have 5.25% to 5.75% fixed rates left over from 2002-2006.
Almost 13% of mortgages outstanding are in distress, with 3.85% in foreclosure, and another 9.12% at least one payment past due - more than 1:8. Worse, "between 65% and 75% of modified subprime loans will fall 60-days or more delinquent within 12 months of the loan change," reports Fitch. And the refi rug just got yanked, at least for the moment. We'll have to see whether it gets put back.
Oil is up to $65.60/barrel. Consumer confidence numbers are a little better, but mostly indicate people think there's nowhere further down to go. GM has dropped below 80¢/share as bankruptcy awaits, and reports say that 14 plant closures will be announced on Monday. First-time jobless claims were 623,000 last week, 13,000 less than the week before. Continuing claims jumped again to set another new record. First-quarter GDP for the US was revised to a smaller loss of 5.7% annualised, but May numbers for the Chicago area were unexpectedly weak. Treasuries have rebounded a bit from Wednesday and Thursday action, but not completely. The US dollar index is off sharply, at 79.4. The Baltic Dry Index has returned to normal (pre-spike normal, anyway) territory. This is healthy.
Japan's factory output jumped rather sharply in April, a positive surprise, despite a massive y-t-y drop in automobile production and exports.
That's all for now, I've got a market to play this afternoon. Good luck.
