San Diego Home Mortgage Blog

Although mortgage prices are slightly better now than when prices were set this morning, and the 10 yr note did reasonably well today after failing to crack 3.28% resistance yesterday, we suggest locking all rate locks overnight and not floating. Still like the market, but with employment on Friday and technicals hanging against resistance levels.

Next week Treasury will sell about $75B in 3s, 10s and 30s, a never ending need to borrow to fund the massive budget deficit. While borrowing has always put momentary pressure on interest rates, not so much these days as the appetite for US debt continues to be strong from China and other foreign buyers; mostly at the long end (10s and 30s), the middle and short end are just hanging on as talk churns that the Fed will start tightening quicker than even what the FOMC statement indicated---mostly guessing however, and based primarily on the equity markets complete belief there will be no new normal ahead.

Tomorrow markets begin three days of data flow; 7:00 the weekly MBA mortgage applications, other than mortgage market participants not much attention is paid to it. At 8:15 the ADP payroll company will release their estimate for job losses in Sept, a closely watched report by traders; the estimate is that ADP will say 200K jobs were lost in the month. The BLS official report on Friday is for a decline of 180K jobs, ADP does not include government jobs in its calculations. Old news, but interesting nonetheless at 8:30; the final Q2 GDP is expected at -1.2% growth. At 9:45 the Chicago purchasing mgrs manufacturing measurement for Sept, forecasts are for the index to improve to 52.0 frm 50.0 in August (50 is the pivot for expansion/contraction).

Yesterday we reported Obama will provide $35B to the mortgage markets. It will go to help state and local housing finance agencies. State housing programs were hit hard by the economic crisis and forced to curtail or suspend tax-exempt bond programs that allow them to provide affordable mortgages. The time frame for $20B of the assistance may close by the end of the year. Under the program, the Treasury would make a market for tax-exempt multifamily and single-family HFA bonds by purchasing up to $20B of them through government-sponsored enterprises Fannie Mae and Freddie Mac. The administration also would provide up to $15B of liquidity to help HFAs remarket their variable-rate debt obligations.

Wholesale Access, a firm that has been around about as long as brokers have been a factor, and made a business from studying mortgage brokers has a dire outlook. The firm expects by the end of the year 15K mortgage brokers will be left, a decline of 72% from the heyday's of 2005. Not really new news, but sobering. That said, those that hang in there for a while longer will have a larger pie to cut up. Yes Virginia, banks are having less to do with brokers these days but looking ahead banks will be back. Banks can't originate without a loss on every loan originated; that is the fundamental reason mortgage brokers came into existence in a major way in the early 80s. Won't take a long time before the big banks shed mortgage originations, as their costs are realized as being excessive.

The serious delinquency rate on Fannie Mae guaranteed single-family loans topped 4% in July, according to its monthly summary report. The percentage of Freddie loans 90 days or more past due and in foreclosure hit 4.17% in July, up 23 basis points from June. A year ago Fannie had a 1.45% serious delinquency rate.