#Mortgage Delinquencies Through the Roof

Posted on February 16, 2017 in Housing | Add Your Voice

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February 16, 2017

Mortgage Delinquencies Through the Roof

Federal Housing Administration mortgage delinquencies jumped in the fourth quarter for the first time in over a decade.

The Mortgage Bankers Association reports the delinquency rate increased to 9.02 percent  from 8.3 percent in the third quarter.


tim carson.jpg”Buying a home is an emotional as much as it is a financial decision for buyers. The rise in delinquencies could be a meaningful psychological data point for millennials and first-time buyers who have struggled to overcome the economic barriers of being able to buy into the American dream – student loan debt, flat wage growth, and “ever increasing rents and home values,” cautions The Collingwood Group Chairman Tim Rood from the MBA’s National Mortgage Servicing Conference & Expo in Dallas where this is a hot topic.  “There is also cause for concern that  jittery mortgage lenders, who have yet to fully explore all four corners of the available credit box, may tighten credit even further as a result of increasing mortgage delinquencies,” warns Rood.

“We had been experiencing great credit quality for so long, and to suddenly see this quarter-over quarter reversal was a surprise, and we’re looking closely at it,” MBA CEO David Stevens says.

“When we see a blip like this, we get concerned about whether that it is a trend,” Stevens said. “And getting these premiums priced appropriately to provide access to home ownership — but also to protect the taxpayer — is that really important balance that the incoming housing secretary is going to have to focus on with his team to make sure we don’t put the taxpayer at risk or the program at risk — and that’s the challenge.”

HUD Secretary Ben Carson and the Trump administration will have to weigh risks to the FHA portfolio against affordability in the housing market overall. Fed Chief Janet Yellen again yesterday signaled higher interest rates ahead, another roadblock for millennials and first-time buyers.

Mortgage Applications In the Basement

Mortgage application fell to their lowest in five weeks even as most home borrowing costs declined in the latest week, Mortgage Bankers Association data released on Wednesday showed.

The Washington-based industry group said its seasonally adjusted measure of loan applications for mortgage refinancing fell 2.9 percent to 1,239.6 in the week ended Feb. 10. This was the lowest level since Jan. 6.

The refinance share of mortgage activity dropped to 46.9 percent of total applications, its lowest level since June 2009, from 47.9 percent the previous week, MBA said.

On the other hand, loan application activity to buy a home edged up 1.1 percent to 223.9 in the latest week, according to the MBA.

Mortgage rates have retreated from more than two-year peaks in step with lower bond yields.

Interest rates on 30-year, fixed-rate conforming mortgages, the most widely held type of U.S. home loan, averaged 4.32 percent, 3 basis points lower than the previous week.

Conforming loans are those with balances of $424,100 or less and qualify for guarantees from federal mortgage agencies Fannie Mae (FNMA.PK) and Freddie Mac (FMCC.PK).

Average 15-year mortgage rates were unchanged on the week at 3.55 percent, while five-year adjustable-rate loans fell to 3.34 percent from 3.39 percent.

read more: http://www.reuters.com/article/us-usa-mortgages-idUSKBN15U1V1?il=0

Builders Losing Confidence 

Builder confidence in the market for single family homes slid 2 points again in February according to the National Association of Home Builders)/Wells Fargo Housing Market Index  The index had backed off two points in January as well, after reaching a decades-long high  December.

Analysts had been expected an increase in the HMI this month.  Those surveyed by Econoday had an average expectation of 68 for the index.

NAHB Chairman Granger MacDonald said, “While builders remain optimistic, we are seeing the numbers settling back into a normal range.  Regulatory burdens remain a major challenge to our industry, and NAHB looks forward to working with the new Congress and administration to help alleviate some of the pressures that are holding small businesses back and making homes less affordable.”

Looking at the three-month moving averages for regional HMI scores, the Northeast fell 2 points to 50 and the Midwest rose 1 point to 65. The South also dipped 1 point to 67 while the West held steady at 79 for the third month in a row.

Consumer Prices Soar

Consumer prices recorded their biggest increase in nearly four years in January as households paid more for gasoline and other goods, suggesting inflation pressures could be picking up.

The Labor Department said on Wednesday its Consumer Price Index jumped 0.6 percent last month after gaining 0.3 percent in December. January’s increase in the CPI was the largest since February 2013.

In the 12 months through January, the CPI increased 2.5 percent, the biggest year-on-year gain since March 2012.

The CPI rose 2.1 percent in the year to December.

Economists polled by Reuters had forecast the CPI rising 0.3 percent last month and advancing 2.4 percent from a year ago.

Inflation is trending higher as prices for energy goods and other commodities rebound as global demand picks up.

The so-called core CPI, which strips out food and energy costs, rose 0.3 percent last month after increasing 0.2 percent in December. That lifted the year-on-year core CPI increase to 2.3 percent in January from December’s 2.2 percent increase.

The Fed has a 2 percent inflation target and tracks an inflation measure which is currently at 1.7 percent.

Gradually firming inflation and a tightening labor market could allow the Fed to raise interest rates at least twice this year.

Boom Time Again for Banks

Shares in America’s banks are booming again, with  Goldman Sachs Group Inc., J.P. Morgan Chase & Co. and Bank of America Corp. hitting fresh trading milestones Tuesday that seemed unreachable during the crucible of the financial crisis.

Investor expectations of higher interest rates, lower taxes, lighter regulation and faster economic growth under the Trump administration have added $280 billion in combined market value to the nation’s six largest banks since Nov. 8.

Shares of Goldman hit a record high, passing a bar first set in 2007 before the financial crisis. J.P. Morgan also hit an all-time closing high.

Meanwhile, Bank of America traded in line with its net worth—or the difference between its assets and liabilities—for the first time since late 2008. The bank had been trading as low as 15% of this level in March 2009.

Bank stocks overall have outperformed broader stock markets since the election. The roughly 27% gain since Nov. 8 for the KBW Nasdaq Bank Index is around three times that of the S&P 500. Markets rose further Tuesday; the Dow Jones Industrial Average climbed 92.25 points, or 0.45%, to close at 20504.41.

One reason for such investor optimism: After years of hacking away at expenses—shedding businesses, cutting staff and investing in technology that can be ramped up and down cheaply—expenses are near all-time lows across Wall Street. That means that if revenue does grow as many investors expect, the payoff could be especially big.

read more: https://www.wsj.com/articles/its-boom-time-again-for-americas-largest-banks-1487116682

This is Going to Change Things: Dubai Plans a Taxi That Skips the Driver, and the Roads

Like a scene from “The Jetsons,” commuters in Dubai, in the United Arab Emirates, may soon climb aboard automated flying taxis, soaring over busy streets and past the desert city’s gleaming skyscrapers, all — quite literally — at the push of a button.

Passenger drones, capable of carrying a single rider and a small suitcase, will begin buzzing above the emirate as early as July, according to the director of the city’s transportation authority, part of an ambitious plan to increase driverless technology.

Already, the eight-rotor drone, made by the Chinese firm Ehang, has flown test runs past the Burj Al Arab, Dubai’s iconic, sail-shaped skyscraper.

The drone “is not just a model but it has really flown in Dubai skies,” Mattar Al Tayer, the director general of Dubai’s Roads and Transport Authority, said on Monday, adding that the emirate would “spare no effort to launch” autonomous aerial vehicles by July.

https://www.nytimes.com/2017/02/14/world/middleeast/dubai-passenger-drones.html?smprod=nytcore-ipad&smid=nytcore-ipad-share

>Still Ahead

Today

MBA’s National Mortgage Servicing Conference & Expo in Dallas (thru Friday)

Bloomberg Consumer Comfort Index, 9:45 a.m. ET

Friday

Fannie Mae’s Q4 Earnings Report

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