A new JPMorgan Chase report
indicates that summer jobs for young adults have significantly declined.
Less than half of young people (46%) who applied for summer employment were
enrolled in 2014 and it's projected that tens of thousands of low-income youths
looking for employment in the major 14 U.S. cities surveyed will come up short
in the approaching summer months. In JP Morgan Chase's "Building Skills
through Summer Jobs: Lessons from the Field" report, there has been a 40%
decline in summer youth employment over the past year and only 26% of this age
group held a paying job in 2011. This employment deficiency particularly
impacts economically disadvantaged youth. In the summer of 2013, low-income
teens (family income less than $20,000), were 20% less likely to be employed
than high-income teens (family income greater than $60,000). As job opportunities
for youth wane, it's imperative that they develop the necessary skills to be
competitive in the job market.
Speaking
of software, "While Mr. Obama and our elected representatives play
political kickboxing over the 50 bp drop in the FHA insurance premium, the
folks at LoanScoreCard want you know
that they can save you up to 70% on your FHA AUS costs without 'an act of
Congress,' so to speak - nice to be able to save that kind of percentage on
anything in our business these days. And when the kickboxing match is
over, and the broken ribs are counted in Obama's favor, we could see FHA volume
tic up by 20%. LoanScoreCard says that their FHA AUS is a better, less
expensive way to get FHA TOTAL Scorecard output than using DU or LP. In fact,
Elva Johnson, Director of Production at Ontario-based, retail-wholesale lender
First Mortgage Corporation signed up with LoanScoreCard, and is seeing
annualized savings of 'around $90,000, in just their retail channel so
far.' She says it is designed specifically for FHA TOTAL Scorecard
findings "the way they were meant to be," rather than through an
agency AUS engine actually designed for agency use. Elva says it is much
more accurate and useful, and saves a significant amount of money on every
loan. First Mortgage Corporation is now in the process of rolling out the
use of LoanScoreCard with the broker channel to increase the savings and
benefit. LoanScoreCard has built this cool model that you can tinker
with, and download, to let you plug your own numbers in,
to see how much value proposition LoanScoreCard can deliver for you on your FHA
AUS. Nice. You get to sell yourself on the idea; no pressure, just
bottom line numbers."
The
MBA is asking its members to contact their Senators and Representative to ask
them to contact the CFPB and ask them to remove the "rate checker"
tool from its website AND meet with industry and other stakeholder representatives at
the earliest date to ensure that this project benefits the consumers we all
seek to serve. "The CFPB should take this misleading tool down and
instead focus on providing a resource that encourages borrowers to shop more
than one lender and makes certain they understand the base rate and all other
costs and terms. Please click HERE below to go to the MAA homepage and click
on the "Take Action" button to get started. Please contact MBA's
Associate Director of Political Affairs, Annie Gawkowski, at 202-557-2816 if
you need assistance."
Recently
the Independent Community Bankers of
America called on the FHFA to withdraw its proposal to
restrict access to Federal Home Loan Banks. The ICBA wrote that "the
agency's plan to require FHLB members to hold between one percent and 10
percent of their assets in home mortgage loans at all times contradicts
Congress and will restrict access to mortgage credit." Community
bankers view access to FHLB's as vital to the overall health of their banking
community, and proposed "restrictions" would deter their
serviceability in the surrounding communities. ICBA Senior Vice President of
Mortgage Finance Policy Ron Haynie wrote. "Without ready access to the
low-cost advances provided by the FHLBs to community banks, many of those banks
would be forced to severely curtail home mortgage lending in the communities
they serve." The exact sticking point with community lenders is the
FHFA's proposal to implement an ongoing asset test to retain FHLB membership,
which would force community banks to either hold more mortgage-backed
securities in portfolio, or have some have suggested, possibly force
banks to pass up opportunities to make other types of consumer, small-business
or agriculture loans. How is the Federal Home Loan Bank system faring?
Well, total outstanding debt climbed to $847.2B in 2014, from $766.8B in 2013,
which constitutes the highest year-end total since 2009 when members began
running off FHLB borrowing tapped during financial crisis.
The move in rates (and yes, mortgages are lagging considerably,
but still...) has really given a shot in the arm to applications and locks, and
residential lenders across the nation are licking their chops over February and
March volumes. (Let's hope margins hold up!) In fact this morning the MBA gave
us last week's application numbers echoing what everyone was thinking. Apps hit
a 17-month high for a second straight week, up 14% with refis jumping 22%
although purchases dropped 2.5%.
For more market news, the
"benchmark" 10-year T-note closed Tuesday at 1.81% and is within 2.5
basis points of its lowest close since May 2013. And we may just hit it this
week, given all the problems overseas. In this country we did have the Housing
Starts and Building Permits duo: Starts were +4.4%, hitting its highest level
in over six years, but Permits were -1.9% (single family +4.5% but multi-family
was -11.9%). In the early going the 10-yr is at 1.78% and agency MBS prices are
roughly unchanged.
Executive
Rate Market Report:
Last night the President did his State of the Union message; you can read all about
it in other commentaries and in the print media but as far as markets are
concerned there was nothing of importance for the immediate consumption.
Treasuries and MBSs opened abut unchanged this morning, early trade in stock
indexes were slightly lower from yesterday’s generally unchanged levels.
At 8:30 the lone data point today; Dec housing starts and
permits. Starts were expected up 1.25%, as reported starts increased 4.5% to
1.089 mil units. Nov starts were revised higher, from 1.028 mil to 1.043 mil
making the increase in Dec even better. Dec building permits were thought to be
up 2.4%, permits declined 1.9% to 1.060. As with starts Nov permits were
revised better, from 1.035 mil to 1.052 mil. Dec. strength was in the
single-family component. Housing starts rebounded 4.4% after declining 4.5% in
November. Expectations were for a 1.041 million pace for November. The 1.089
million unit pace was up 5.3% on a year-ago basis. Single-family permits rose
4.5% while multifamily permits fell 11.8%.
MBA said mortgage applications increased again; applications
increased 14.2% from one week earlier. The Refinance Index increased 22% from the previous week. The
seasonally adjusted Purchase Index decreased 3% from one week earlier.
Conventional refinance applications increased 21% relative to the previous
week, while government refinances increased 29%. The increase in government
refinances was driven by a 57% surge in applications for FHA loans, which also
boosted the FHA share of refinance applications to 5.2% from 4.1% the prior
week. The refinance share of mortgage activity increased to 74% of total applications,
the highest level since May 2013, from 71% the previous week. The
adjustable-rate mortgage (ARM) share of activity increased to 6.4% of total
applications. The average contract interest rate for 30-year fixed-rate
mortgages with conforming loan balances ($417,000 or less) decreased to 3.80%,
the lowest level since May 2013, from 3.89%, with points increasing to 0.29
from 0.23 (including the origination fee) for 80% loan-to-value ratio (LTV)
loans. The average contract interest rate for 30-year fixed-rate mortgages with
jumbo loan balances (greater than $417,000) decreased to 3.86%, the lowest
level since May 2013, from 3.88%, with points remaining unchanged at 0.23
(including the origination fee) for 80% LTV loans.
Tomorrow will be a watershed day for the European Central Bank, as it decides whether
to launch large-scale government bond purchases, known as quantitative easing.
Will the ECB sets an explicit target amount for QE, or leaves it vague? So far
since the financial collapse in 2008 the ECB has disappointed each time there
was a stimulus of any kind presented to markets. With each attempt to fight the
debt problems using stringent austerity policies it wasn’t enough and southern
Europe’s economies continued to falter. In the last three years global markets
have been disappointed on every ECB decision. The WSJ just said the discussion
going on is for $700B of purchases debt over the next year at $58B a month.
Greek elections three days after the ECB meets that could
determine the country’s future within the Eurozone. The ECB probably
wouldn’t want to buy Greek debt under these uncertainties. The bank could get
around this by setting a minimum, investment-grade threshold that would leave
Greece and Cyprus out for now. If the current Greek ruling party loses there is
a fear that Greece may leave the EU. Greece can’t handle the austerity put on
it by the ECB, its debt is choking the country; non-performing loans (90 days),
$89.4B The economy has shrunk 25% since its peak in mid-2008.
The DJIA opened -96, NASDAQ -16, S&P -7. The 10 at 9:30 -1
bp to 1.79%; 30 yr MBS price -3 bp.
The session is starting with high volatility, no driving news
today so far. The technical picture still looks good but a corrective move
back to 1.90% for the 10 yr (1.78% currently) cannot be ruled out. Not
happening today but tomorrow and again next Monday on the Greek elections may
pose high hurdles to overcome. The 10 and MBSs are both overbought in the near
term. We have support on the 10 yr at 1.90% and 102.00 for Feb FNMA coupon -60
bp from the present price.
PRICES @ 10:10 AM
- 10 yr note: +4/32 (12 bp) 1.78% -1 bp
- 5 yr note: +1/32 (3 bp) 1.1,28% unch
- 2 Yr note: unch 0.50% unch.
- 30 yr bond: +17/32 (53 bp) 2.36% -2 bp
- Libor Rates: 1 mo 0.168%; 3 mo 0.256%; 6 mo 0.355%; 1 yr 0.611%
- 30 yr FNMA 3.0 Feb: @9:30 102.61 -3 bp (-8 bp from 9:30 yesterday)
- 15 yr FNMA 3.0 Feb: @9:30 104.62 +3 bp (-7 bp from 9:30 yesterday)
- 30 yr GNMA 3.0 Feb: @9:30 102.90 -5 bp (-33 bp from 9:30 yesterday)
- Dollar/Yen: 117.48 -1.34 yen
- Dollar/Euro: $1.1602 +$0.0052
- Gold: $1301.70 +$7.50
- Crude Oil: $47.54 +$1.11
- DJIA: 17,456.73 -58.50
- NASDAQ: 4652.77 -2.08
- S&P 500: 2022.08 -0.47
No comments:
Post a Comment