Morning Report: Slowdown in rental collections

Vital Statistics:

S&P futures4,33217.8
Oil (WTI)73.910.85
10 year government bond yield 1.33%
30 year fixed rate mortgage 3.08%

Stocks are higher this morning on no real news. Bonds and MBS are down.

The global rally in bonds seems to be emanating from growth fears out of Asia. “Asia was seen as the poster child in pandemic response last year, but this year the slow vaccination rollout in most countries combined with the arrival of the delta variant means another lost year,” said Mark Matthews, head of Asia research with Bank Julius Baer & Co. in Singapore. “I suspect Asia will continue to lag as long as vaccination rollouts remain at their relatively sluggish levels and high daily new Covid counts prevent them from lifting mobility restrictions.”

Given that COVID issues are behind the lagging growth in Asia, I suspect this temporary respite in bond yields will be short-lived.

The number of homeowners in active forbearance plans continues to drop, according to Black Knight. Over the past month, loans in active forbearance have fallen 12% to 1.9 million.

No money down mortgages are back, under the rubric of 80/20 piggybacks. They aren’t cheap, with a 4.5% floor rate on the primary and 10% on the second, but I guess rising home prices cure all sorts of underwriting sins.

The National Multifamily Housing Council reported that 76.5% of renters made a full or partial rent payment by July 6 this year. This compares unfavorably to the 77.4% which paid by July 6 2020 and 79.7% that were collected by July 6 2019. Separately, momentum seems to be flagging in commercial real estate.


Author: Brent Nyitray

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

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