A
few weeks ago I wrote about the "over 65ers", the age demographic
which is very much a part of the baby-boom generation. Recently the U.S. Census
Bureau released "The Centenarian Population: 2007-2011,"
which focuses on those who have reached a milestone many of us won't get to in
life: 100 years of age. It's an interesting demographic, maybe one which gets
overlooked considering only 55,000 Americans fall into this group (versus, say,
90 million Millennials aged 18-34).
The
number of banks available to consumers is decreasing - but it is not because of
failures.
In fact, there has not been a bank failure in the USA since 2/28/14, a stretch
of 54 days, and only 5 banks have failed YTD. (To put that in perspective,
on 7/20/12, 5 US banks failed in a single day.) And there has not been a new
bank formed in several years. (The FDIC believes it addressed this concern in
this recent ABA entry.) No, the
number of banks has been declining due to mergers and acquisitions.
And
the trend of financial sector companies merging continues, big and small. Just in the last week
or so... Hilltop Holdings Inc. (NYSE: HTH) and SWS Group, Inc. (NYSE: SWS)
announced that they have entered into a definitive merger agreement. Bankwell
Financial Group, Inc. (OTC Bulletin Board: BWFG) and Quinnipiac Bank &
Trust Company announced the execution of a definitive merger agreement pursuant
to which Bankwell will acquire Quinnipiac through the merger of Quinnipiac into
Bankwell Bank. The acquisition will add approximately $100 million in assets to
Bankwell, bringing total assets to $880 million as of the most recent reporting
period. In Massachusetts Institution for Savings in Newburyport and Its
Vicinity ($1.7B) will acquire Rockport National Bank ($200mm) for $28.3mm in
cash or about 1.9x tangible book. In Iowa First State Bank ($106mm) will
acquire Patriot Bank ($56mm) for an undisclosed sum. In Pennsylvania Community
Bank ($546mm) will acquire First Federal Savings Bank ($319mm) for about
$54.5mm in cash (35%) and stock (65%). U.S. Bank National Association ($360B,
OH) will acquire the document custodian business of Ally Bank ($99B, UT) for an
undisclosed sum. The move increases documents under custody at U.S., such as
collateral loan files, equipment leases, home equity, improvement, vehicle loans
and leases. In Texas Heritage Bank ($107mm) will acquire Nixon State Bank
($76mm) for an undisclosed sum. In next-door New Mexico Grants State Bank
($120mm) will acquire Sunrise Bank of Albuquerque ($41mm). And Centennial Bank
($6.8B, AR) will acquire Florida Traditions Bank ($296mm, FL) for $43mm in
stock.
Thousands of LP users received
this note from Freddie yesterday: "Loan Prospector is currently unable to
process any new submissions. This issue impacts all Loan Prospector access
methods. We're applying all available resources to resolve this issue and
apologize for any inconvenience. We'll inform you when this issue has
been resolved." Uh oh - another case of DDoS, similar to what Ellie Mae
went through a few weeks ago? And
millions of readers read with concern about what FHA Commissioner Carol Galante
told The Washington Post about her agency's position on not lowering the cost
of FHA mortgages in spite of the MBA and the NAR giving it a shot
Existing Home sales were
essentially flat in March, while the growth in home prices moderated. Jonathan
Smoke opined, "We can almost hit replay on our March analysis, but it is
worth repeating with updated data so the point we originally made can really
sink in: the existing home market is indeed getting stronger but you need to
get used to 'stronger' equating to 'fewer but better' sales. A stronger resale
market is one where we see increasing levels of good ole fashioned,
non-distressed sales consummated between normal consumers amidst price appreciation
and limited supply. We want to see fewer foreclosures, fewer REO sales,
and fewer investors. And indeed we are seeing less of what we don't want
to see and more of what we do want to see-it's just netting out that the totals
are slightly lower. And that's fine because the current rate of single
family existing home sales is still almost 15 percent above the 45-year monthly
annualized rate."
His note continued, "Once
again we can look at pricing as a key indicator that conditions are improving
and not deteriorating. According to the NAR release, the median existing home
price in March was $198,500, 7.9 percent up over this time last year.
Supporting continued price appreciation is the low level of supply, which
remains below normal at 5.2 months of supply. Despite continued rhetoric about
higher mortgage rates hurting the recovery, the facts don't support that
concern. The average interest rate on purchase mortgages on regular
resales in the first quarter of 2014 actually declined 7 basis points from the
fourth quarter of 2013 due in part to an increasing share of adjustable rate
mortgages. The average mortgage rate is up 12 basis points over the first
quarter of last year, but as we enter the second half of the year, the
year-over-year comparison will start looking better."
Michelle Meyer wrote,
"Existing home sales continue to fall, declining 0.2% in March to 4.59
million. Part of the reason home sales continue to decline is due to fewer
distressed properties - the share of sales that are distressed declined to 14%
from 21% last March. The share of investors slipped to 17% (Feb: 21%) while the
share of first-time homebuyers ticked up to 30% (Feb: 28%) - part of that is
seasonal as we approach the spring selling season first time homebuyers
naturally pick up as share of activity. But nonetheless, this is a trend we think
will persist as the market gradually normalizes."
Lawrence Yun, NAR chief
economist, said that current sales activity is underperforming by historical
standards. "There really should be stronger levels of home sales given our
population growth...In contrast, price growth is rising faster than historical
norms because of inventory shortages...With ongoing job creation and some
weather delayed shopping activity, home sales should pick up, especially if
inventory continues to improve and mortgage interest rates rise only
modestly...With rising home equity, we expect distressed homes to decline to a
single-digit market share later this year."
And as if to echo these trends,
the FHFA House Price Index was up 0.6 Percent in February. The purchase-only index
for the U.S. has shown increases for the last three months despite a harsh
winter season. The 0.1% decrease in November 2013 ended a 21-month trend of
price increases that had begun in February 2012. The previously reported 0.5%
January increase was revised downward to 0.4%. Annually, US home prices rose
just 6.9% in the 12 months through February, the smallest gain in a year, in a
sign that the housing market's recovery is cooling. But hey, nothing goes up
forever, right? And this morning the MBA reported that apps last week were
down 3.3%, with refis falling 3.7% and purchases dropping 2.6%.
Looking at the bond markets,
volatility has been absent for several weeks now, much to the relief of lock
desks everywhere. Yesterday Thomson Reuters observed buying from REITs, money
managers, and banks, as well as, the Fed which was focused primarily in 4%
securities (containing 4.25% and higher mortgages). But prices were
basically unchanged from Monday, which were pretty much unchanged from late
last week. Today we'll see March New Home Sales (expected to rise slightly)
and the Treasury auction off $35 billion in 5-year notes at noon CST. For
numbers, the yield on the 10-yr Tuesday afternoon was 2.73% and in the early
going is down to 2.70% so we can expect a slight improvement in agency MBS
prices.
No comments:
Post a Comment