Morning Report: The FHFA is listening to industry on the 50 basis point refi fee

Vital Statistics:

 

Last Change
S&P futures 3421 28.6
Oil (WTI) 42.54 0.17
10 year government bond yield 0.64%
30 year fixed rate mortgage 2.91%

 

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

 

The upcoming week will be pretty data-light, although we will get real estate prices and new home sales on Tuesday and personal incomes / spending on Friday. Jerome Powell speaks on Thursday.

 

The Wall Street Journal is reporting that the FHFA is negotiating with the mortgage industry to delay the 50 basis point hike for refinances:

As of Friday, the agency was negotiating delaying the fee with industry groups but was opposed to canceling it outright, according to people familiar with the discussions. Industry groups, including the American Bankers Association and the Mortgage Bankers Association, have generally sought to eliminate the surcharge altogether, the people said.

That said, the 50 basis point fee probably equates to something like 1/8% in rate, so it probably won’t end the refi wave. The industry was most concerned about the short fuse on the announcement, and the prospect of losing 50 basis points on loans that are already locked and in the pipeline.

Housing Wire got a quote from ex-MBA president Dave Stevens:

Dave Stevens, former president and CEO of the Mortgage Bankers Association and former commissioner of the Federal Housing Administration, told HousingWire on Saturday that, “If true, it seems clear that Director Calabria listened to industry concerns about the impact of this short time frame to implement. And while the logic of the fee remains in question, this is a good sign and hopefully will lead to a change in behavior going forward where impact assessment conversations can take place prior to major policy announcements.”

Even if they delayed the implementation by a month, it would give people a chance to clear out their pipelines.

 

Loan aggregator Amerihome is no longer doing self-employed borrowers for non-delegated. I guess with so many W2 refinancings out there, why mess around with harder files? Expect to see other aggregators make similar announcements.

 

Lower rates and tight supply has home prices rising at a double-digit clip. The issue is that these increases are happening in a period of economic weakness, which has some pros worried. That said, the COVID crisis has caused many builders to temporarily slow building, and many sellers to pull their listings since they don’t want to have people walking through their homes.

 

 

Morning Report: No progress on shutdown

Vital Statistics:

 

Last Change
S&P futures 2528.75 -3
Eurostoxx index 341.85 -1.49
Oil (WTI) 49.18 1.22
10 year government bond yield 2.65%
30 year fixed rate mortgage 4.43%

 

Stocks are flattish on no real news. Bonds and MBS are down small.

 

No progress was made over the weekend with respect to re-opening the government. Trump mentioned the possibility of declaring a national emergency in order to obtain funding for the wall without Congressional approval.

 

The drop in rates over the past month has caused an increase in activity in what is typically a dead part of the year. Falling interest rates have lured some buyers back into the market who are looking to take advantage of the decline before they move up again. FTN Financial estimates that if we get another 20 basis point drop in the 30 year fixed rate mortgage, 300 billion conforming loans will become in the money and refinanceable. With the Fed Funds futures predicting the next Fed move will be a rate cut, that is in the realm of possibility.

 

Friday’s jobs report showed an increase of 300k jobs, yet the unemployment rate rose from 3.7% to 3.9%. Does that make sense? It does if you get deep in the weeds on how the BLS calculates these numbers.

 

New York State is legendary for how long a delinquent borrower can live in their house without paying the mortgage. Some have been there for almost a decade.