Morning Report: The CFPB updates the QM rule

Vital Statistics:

	Last	Change
S&P futures	3638	-22.3
Oil (WTI)	46.81	0.04
10 year government bond yield		0.89%
30 year fixed rate mortgage		2.80%

Stocks are lower this morning on fears of a nasty Brexit. Bonds and MBS are up.

The FDA is working aggressively to get Pfizer’s COVID-19 vaccine approved for emergency use.

The CFPB updated its QM rule by going with a price-based rule as opposed to strict DTI. Essentially, the new rule compares the rate on the loan and compares it to the average prime offer rate (APOR) of comparable transactions. If the rate is higher by less than 1.5%, then it is QM. If it exceeds the APOR by 1.5% – 2.25%, there is a rebuttable presumption that the borrower has the ability to repay.

“Through this General QM Final Rule, we are working to create an appropriate, more flexible General QM loan definition,” said CFPB Director Kathleen L. Kraninger.  “Our final rule’s price-based approach strikes the best balance between assessing consumers’ ability to repay and promoting access to responsible, affordable mortgage credit.”

Inflation at the wholesale level remains below the Fed’s target. The Producer Price Index rose 0.1% MOM and 0.8% YOY. Stripping out food, energy, and trade services, it rose 0.1% MOM / 0.9% YOY.