Morning Report: Mortgage Credit Availability decreases

Vital Statistics:

S&P futures4,354-13.2
Oil (WTI)71.94-0.25
10 year government bond yield 1.32%
30 year fixed rate mortgage 3.12%

Stocks are lower this morning as Jerome Powell heads to the Hill for another day of testimony. Bonds and MBS are up.

Jerome Powell’s testimony in front of the House yesterday was considered more or less dovish, with with tapering “still a ways off.” “The high inflation readings are for a small group of goods and services directly tied to the reopening,” Powell testified, language that indicated he saw no need to rush the shift towards post-pandemic policy. The Fed at this point expects to continue its bond buying until there is “substantial further progress” on jobs, with interest rates pinned near zero likely until at least 2023.

Initial Jobless Claims fell to 360k last week, while the Philly Fed Manufacturing index fell and the Empire State Manufacturing Index rose. Finally, industrial production rose 0.4%, while manufacturing production fell slightly and capacity utilization ticked up.

Mortgage Credit Availability fell in June, according to the MBA’s Mortgage Credit Availability Index. “Mortgage credit availability in June fell to its lowest level since September 2020, ending more than half a year of increasing credit supply,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “The overall credit availability index remains close to 2014 lows, as mortgage credit has not recovered since the sharp downturn in the first half of 2020.” The caps on higher risk and non-owner occupied loans remains an issue as well.

The FHA is relaxing the guidelines for student loan debt, making it easier to qualify for a FHA loan.

Home sales fell 1.2% from May to June, according to Redfin. The median home price rose a whopping 25% to $386,888 compared to a year ago. The lockdown comparisons of a year ago are almost certainly exaggerating the rise, but prices are rising across the US at a pretty hefty clip.

“In June we entered a new phase of the housing market,” said Redfin Chief Economist Daryl Fairweather. “Home sales are starting to stall because prices have increased beyond what many buyers can afford. This summer I expect home prices to stabilize as more homeowners list their homes, realizing they likely won’t fetch a higher price by waiting longer to sell. But as rents rise, homeownership will become appealing to more people, and home sales will rev back up by 2022.”


Author: Brent Nyitray

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

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