Marc's Mortgage Matter's

It used to be we moved the clocks back in many states this weekend - the last Sunday in October. A few years ago, this was moved to the first weekend in November - so leave your clocks alone today, Sunday. (In fact, up until the railroads started crisscrossing the US in the late 1800's, different locations set their own time. Daylight Savings Time first sprang up in WWI, and again in WWII, and was finally standardized by the government in 1966.) Prior to that, it was still left up to regions.

Industry grumblings...."Say all you want about the market being robust - it's only a boom for FannieMae/FreddieMac or FHA vanilla loans.  Where's the non-agency Stated Income market?  No Doc loans for self employed borrowers with decades of excellent credit? I've been in this business for almost 20 years & have never had such a lack of common sense underwriting in my entire career.  We need to get back to Old School Mortgage Banking (i.e. will the loan pay?) and underwriting based on performance & risk."

"The government and the press can say all they want about QE 2, or QE whatever. Eventually I am sure that it will help companies lower their cost of borrowing, and maybe they'll pass it along to their employees, who will feel better about spending money. But for now, if my borrower can't qualify at 4%, they are not going to qualify at 3% either - banks have not passed their cash on to the borrowers quite yet."

Economists at Deutsche Bank "are not worried about further declines in home prices". Better housing affordability, easier lending standards, and modest jobs gains should keep home prices near current levels, if not ultimately begin to push prices higher over time, assuming of course the labor market gains more traction." They even point to the American Institute of Architects (AIA), residential architectural billings - up sharply from its all-time low - highly correlated to housing starts with a lag time of 4 months. Earlier this week we learned that Existing Home Sales were up 10%, and yesterday's New Home Sales were up over 6% - stronger than expected. But year over year, new-home sales in September were down by 21.5% and at the current sales pace it would take 8 months to sell the nation's inventory of 204,000 new homes. 

Mortgage rates are mostly as flat as the economy, and there doesn't seem to be any strong reason form them to budge much one way other the other, at least not until we get past the forthcoming mid-term elections. After the homebuyer tax credits expired back in the spring, homebuilding and homebuying have been pretty weak, and prospects for them getting better in a hurry are pretty slim. While we've championed a new-but-differently-structured tax credit, there seems to be little likelihood of that happening anytime soon.

Of course, low interest rates remain a key support for housing and the economy, but their effect has limits. Refinancing activity has been pretty fair, but not nearly as solid as you would expect given record-low interest rates and the mini-refi-boom seems to lack durability. Applications for home purchases are languishing, though, and are again trending toward 2010 lows as we approach the traditionally slower fall and winter seasons.

Folks up for election are probably thankful that the next national employment report doesn't come until after the election, but it's a fair bet that no one needs reminding that they don't have a job when they step into the voting booth on November 2. That, coupled with continuing sour moods among consumers are making some politicians a nervous group.

At the moment, there's not much to push rates in any direction. Mortgage and financial markets await the results of November 2 to find some sense of direction.

Comments made in the year 1955 - "only" 55 years ago.

"I'll tell you one thing, if things keep going the way they are, it's going to be impossible to buy a week's groceries for $10.00."

"Have you seen the new cars coming out next year? It won't be long before $1,000.00 will only buy a used one."
"Did you hear the post office is thinking about charging 7 cents just to mail a letter?"

"If they raise the minimum wage to $1.00, nobody will be able to hire outside help at the store."

"When I first started driving, who would have thought gas would someday cost 25 cents a gallon. Guess we'd be better off leaving the car in the garage."
"Did you see where some baseball player just signed a contract for $50,000 a year just to play ball? It wouldn't surprise me if someday they'll be making more than the President."
"I never thought I'd see the day all our kitchen appliances would be electric. They are even making electric typewriters now."

"If they think I'll pay 30 cents for a haircut, forget it."
"It's too bad things are so tough nowadays. I see where a few married women may have to work to make ends meet."

Two men were walking home after a Halloween party and decided to take a shortcut through the cemetery just for laughs. Right in the middle of the cemetery they were startled by a tap-tap-tapping noise coming from the misty shadows.
Trembling with fear, they found an old man with a hammer and chisel, chipping away at one of the headstones.
"Holy cow, Mister," one of them said after catching his breath, "You scared us half to death -- we thought you were a ghost! What are you doing working here so late at night?"
"Those fools!" the old man grumbled. "They misspelled my name!"