Morning Report: CRA regs for non-banks

Vital Statistics:

S&P futures4,4253.2
Oil (WTI)66.240.65
10 year government bond yield 1.28%
30 year fixed rate mortgage 2.96%

Stocks are flattish this morning on no real news. Bonds and MBS are up small.

The upcoming week is relatively data-light however we will get some inflation data with the Consumer Price Index and the Producer Price Index. We will also get productivity data as well as plenty of Fed-speak.

Some good commentary from various home builders. It looks like the torrid price growth has eased. While shortages are still an issue, lumber prices have come back to earth.

The MBA is urging New York Governor Andrew Cuomo to veto a bill that would require independent mortgage bankers to follow Community Reinvestment Act guidelines. The MBA called the bill “unnecessary,” and said it “fails to consider the existing legal infrastructure and significant industry efforts that have greatly expanded mortgage lending to low- and moderate-income (LMI) borrowers in New York.” There definitely seems to be a push to institute banking-like regulations on independent mortgage bankers – witness GNMA’s proposals for capital requirements on non-bank servicers.

Rising house prices have an outsized effect on the inflation numbers. The concept is owners equivalent rent, which attempts to come up with a number if a homeowner rented his house out. So far, we haven’t seen much in the way of increased rents during the pandemic, as foreclosure moratoriums have made raising rent difficult. Owner’s equivalent rent has been running at around 3.5% annually, despite double-digit increases in house prices.

Author: Brent Nyitray

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

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