Morning Report: Home prices rise double digits

Vital Statistics:

	Last	Change
S&P futures	4,164	-24.8
Oil (WTI)	65.24	0.87
10 year government bond yield		1.60%
30 year fixed rate mortgage		3.14%

Stocks are lower this morning on overseas weakness. The big trade seems to be to dump tech in favor of early-stage cyclicals. Bonds and MBS are up small.

The share of mortgages in forbearance fell again last week, decreasing by 2 basis points to 4.47% of servicers’ portfolios. Ginnie Mae and private label fell the most. “The rate of exits has slowed the past two weeks, with this week’s exit rate reaching the lowest since February,” said Mike Fratantoni, MBA Senior Vice President and Chief Economist. “The increase in the forbearance share for portfolio and PLS loans highlights both the ongoing buyouts of delinquent loans from Ginnie Mae pools as well as an increased forbearance share for other loans that are not federally backed.”

The CFPB sent a letter to the biggest apartment owners warning them about trying to evict anyone. “Landlords should ensure that FDCPA-covered debt collectors working on their behalf, which may include attorneys, notify tenants of their rights under federal law. Nearly nine million households are at risk of eviction due to the economic effects of COVID-19, but no one should lose their home without understanding their rights,” said CFPB Acting Director Dave Uejio. “We will hold accountable debt collectors who move forward with illegal evictions.”

Home prices rose 11.3% YOY in March, according to CoreLogic. Month over month, home prices rose 2%. CoreLogic sees the 2021 spring homebuying season surpassing 2018 and 2019. Demand is strongest at the lower end. CoreLogic said that prices for homes at 25% below the median home price saw increases of 15% plus. This is due to a rush of first-time homebuyers moving out to the suburbs. CoreLogic sees pricing flatting out from here, with gains over the next year rising only 3%. Home prices are flying everywhere except New York State.

Banks eased credit standards in April, according to the Fed’s Senior Loan Officer Survey.

Over the first quarter, banks eased lending standards for most mortgage loan categories and for revolving home equity lines of credit (HELOCs), with notable differences across bank sizes.⁶

A moderate net share of large banks eased standards on government-sponsored enterprise (GSE)-eligible mortgages, which make up the majority of bank mortgage originations. Furthermore, significant net shares of large banks eased standards on HELOCs and all other mortgage categories except government and subprime mortgages. Moderate net shares of large banks eased standards on government residential mortgages. At the same time, modest net shares of small banks eased standards on qualified mortgage (QM) jumbo mortgages, on QM non-jumbo, non-GSE-eligible mortgages, and on HELOCs. Small banks left standards on all other residential mortgage types except subprime mortgages basically unchanged.

Large banks reported unchanged demand across most mortgage categories and weaker demand for HELOCs. In contrast, small banks reported stronger demand across all mortgage categories except subprime mortgages and unchanged demand for HELOCs on net. Significant net shares of small banks reported stronger demand for GSE-eligible and QM jumbo residential mortgages, and moderate net shares reported stronger demand for all other categories except government and subprime mortgages. A modest net share of small banks reported stronger demand for government mortgages.