Morning Report: MBA urges tweaks to the CFPB

Vital Statistics:

 

Last Change
S&P futures 3199 3.25
Oil (WTI) 60.61 -0.34
10 year government bond yield 1.89%
30 year fixed rate mortgage 3.96%

 

Stocks are flattish this morning on no real news. Bonds and MBS are flat as well.

 

Mortgage Applications fell by 5% last wee as purchases fell 2% and refis fell 7%. Mortgage rates were mostly unchanged, even as a potential trade deal between the U.S. and China caused rates to inch forward at the end of last week,” said Mike Fratantoni, MBA Senior Vice President and Chief Economist. “With rates showing little meaningful movement, both refinance and purchase activity took a step back. As we move into the slowest time of the year for home sales, purchase application volume is declining but continues to outperform year-ago levels, when rates were much higher. Purchase activity was 10 percent higher than a year ago.”

 

Job openings ticked up to 7.3 million at the end of October, according to the BLS. Retail, financial, and durable goods manufacturing saw the biggest increases. The quits rate was stuck at 2.3%, which is odd given that the labor market is strong and wages are increasing.

 

iBuying, which means buying or selling property via platforms like Zillow, Opendoor or Offerpad accounted for 10% of all sales in several MSAs. These platforms permit the buyer and seller to bypass the traditional realtor and sell their properties directly to the company sponsoring the exchange. Does this save the seller money, since they aren’t paying realtor commissions? Not really. Zillow charges a 7.5% fee on average, which is higher than the 6% in realtor commissions a seller typically pays. That extra 1.5% is a convenience fee – you don’t have to stage the property, you get a non-contingent offer within a few days, and can sew the process up in a week or two.

 

The MBA and NAR filed amicus briefs urging the Supreme Court to maintain the CFPB, but to remove the language that says a Director can only be removed for cause. “When determining how to remedy an unconstitutional statute, courts seek to give effect to congressional intent and to avoid unnecessary disruption,” the brief said. “Striking down the entirety of the CFPA, or declaring it unconstitutional without addressing severance, would eliminate or call into question the legitimacy of the detailed, technical regulations that govern past and future real estate finance transactions, not to mention the authority of a federal agency responsible for enforcing a host of consumer protection laws. Such an outcome would immediately cause significant disruption to the American economy, overturning regulatory guideposts, upsetting settled expectations, and creating substantial uncertainty in our housing markets, all in contravention of Congress’s clearly expressed intent to promote financial stability. The Court should avoid causing such harm. Accordingly, in the event that the Court finds the for-cause removal provision unconstitutional, it should sever that provision from the statute.”

 

After yesterday’s blockbuster housing starts data, Fannie Mae took up their estimates for homebuilding in 2020. They anticipate housing starts will increase by 10% and housing will be the sector that leads the economy going forward.

Author: Brent Nyitray

In the physical sciences, knowledge is cumulative. In the financial markets, it is cyclical

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