Daily Archives: December 5, 2007 @ 11:34 pm (Wednesday)

MBA Mortgage Applications Index for Nov. 30 shows lower rates

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interesting how mtg rates are lower than at the Oct 31 fed meeting.

U.S. MBA Mortgage Applications Index for Nov. 30 (Table) 2007-12-05 07:00 (New York)
By Terry BarrettDec. 5 (Bloomberg) — Following is a summary of U.S. mortgage activity from the Mortgage Bankers Association.

Nov 30 Nov 23 Nov 16 Nov 9 Nov 2 YoY%
—— Weekly Change (SA) —– -NSA-
Markt Index 22.5% -5.2% -3.6% 5.5% -1.6% 24.2%
Purchases 15.2% -4.9% -2.0% 4.8% 0.0% 9.5%
Refinancing 31.8% -4.9% -5.0% 6.4% -3.2% 38.8%
Fixed Rate 26.9% -3.9% -3.9% 3.9% -1.1% 4.2%
Adjust Rate -2.8% -11.9% -1.9% 15.1% -5.0% -39.7%
           
—– Contract Interest Rates —– Yr Ago
FRM 30-Yr 5.82% 6.09% 6.18% 6.19% 6.16% 5.98%
FRM 15-Yr 5.38% 5.69% 5.72% 5.76% 5.77% 5.66%
Balloon 7-Yr 5.23% 5.50% 5.35% 5.32% 5.26% 6.08%
Balloon 5-Yr 5.88% 6.28% 6.26% 6.10% 5.86% 6.58%
ARM 1Yr Tsy 6.28% 6.24% 5.97% 5.98% 5.94% 5.79%
FHA 203(b) 5.97% 6.06% 6.12% 6.21% 6.22% 6.10%
           
—– Apps (NSA)   —–  
Total            
Average Loan Size $242.0 $245.7 $244.6 $243.7 $241.6 $244.3
Number Change 51.5% -25.5% -5.2% 4.2% -2.4% 3.7%
$ Volume Change 49.2% -25.2% -4.9% 5.1% -3.5% 6.0%
Purchases            
Average Loan Size $239.0 $240.5 $234.5 $233.9 $234.0 $239.0
Number Change 37.2% -18.7% -5.5% 2.1% -1.6% -1.3%
$ Volume Change 33.9% -16.6% -5.3% 2.0% -3.6% 0.3%
Refinancings            
Average Loan Size $243.6 $251.9 $254.6 $253.3 $249.5 $249.7
Number Change 64.9% -32.3% -5.0% 6.4% -3.2% 9.2%
$ Volume Change 63.6% -33.0% -4.5% 8.0% -3.3% 12.3%
           
—– Indexes (SA) —–    
Market Index Level 791.8 646.3 681.7 707.3 670.6 681.7
Purchases 464.3 403.2 424.1 432.6 412.7 412.9
Refinancings 2761.3 2093.0 2199.9 2315.7 2176.1 2249.0
Fixed Rate 733.8 578.4 602.1 626.7 603.3 609.8
Adjust Rate 2016.6 2074.3 2533.2 2401.9 2085.9 2194.9
           
Conventional Index 1138.4 933.5 977.4 1017.0 960.0 982.2
Conventional Purchase 695.4 609.8 639.3 653.9 622.7 625.9
Conventional Refinance 3006.1 2283.3 2371.1 2503.6 2336.2 2433.2
Conventional FRMs 101.6 831.0 857.5 895.9 859.4 875.0
Conventional ARMs 2919.3 3035.1 3435.9 3602.1 3024.6 3181.8
           
Govt Index 214.0 167.4 188.7 190.8 188.0 180.7
Govt Purchas 133.9 107.9 116.4 116.4 112.7 108.5
Govt Refi 1475.9 1093.5 1304.1 1331.1 1339.8 1283.7
Govt FRMs 204.3 157.6 176.6 178.1 176.7 168.0
Govt ARMs 428.3 383.7 454.9 468.1 436.4 460.8

NOTE: March, 16 1990=100. Contract interest rates assume a 20% down payment. Average loan size is in thousands.

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Saudi oil production rose last month

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2007-11-30 Saudi Oil Production

Saudi production rose last month, meaning demand for their output increased even at the higher prices. They are acting as ‘swing producer’ and let output vary to meet actual demand. By definition, therefore, markets are ‘well supplied’ at their price. To avoid controversy, they deny this policy, but in fact they have no choice as a point of market logic.

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2007-12-05 US Economic Releases

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2007-12-05 MBA Mortgage Applications

MBA Mortgage Applications (Nov 30)

Survey n/a
Actual 25.5%
Prior -4.3%
Revised -5.2%

Mortgage banking purchase index is holding above 400 since April, and up nicely year over year. The ‘multiple application’ story is getting old.

2007-12-05 Challenger Job Cuts YoY

Challenger Job Cuts YoY (Nov)

Survey n/a
Actual -4.7%
Prior -8.8%
Revised n/a

Modest improvement- doesn’t look like a recession has started.

2007-12-05 ADP Employment Change

ADP Employment Change (Nov)

Survey 50K
Actual 189K
Prior 106K
Revised 119K

No weakness here- prelude to Friday’s employment number.

2007-12-05 Nonfarm Productivity

Nonfarm Productivity (3QF)

Survey 5.9%
Actual 6.3%
Prior 4.9%
Revised n/a

More real output from the same amount of labor input, further questions the deflator for Q3.

2007-12-05 Unit Labor Costs

Unit Labor Costs (3QF)

Survey -1.2%
Actual -2.0%
Prior 0.2%
Revised n/a

As above, the q3 deflator looked suspiciously low.

This should adjust with q4 numbers.

2007-12-05 Factory Orders

Factory Orders (Oct)

Survey 0.0%
Actual 0.5%
Prior 0.2%
Revised 0.3%

Boring, and not worse than Fed forecasts.

2007-12-05 ISM Non-Manufacturing

ISM Non-Manufacturing (Nov)

Survey 55.0
Actual 54.1
Prior 55.8
Revised n/a

It’s been drifting lower with falling budget deficit, but exports propping up gdp.

Probably not any worse than Fed forecasts.

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Bank capital NOT a constraint on lending

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Here’s the response to Jan’s (Goldman) concern about lost capital constraining lending.

Bank capital grows endogenously- it’s not a constraint on lending apart perhaps from the very near term.

Banks ‘know’ the cost of capital, and the roe’s they need to make to pay for new capital.

For example, if Citi paid 11%, and they can leverage it 15 times, that’s about a .75% ‘add on’ to their cost of funds for funding loans.

With floating fx, the causation is ‘loans create deposits’ and this applies to availability of bank capital as well.

So it’s all about price, not quantity, for both loans and capital.

And banks currently do have a lot of ‘room’ for lending with current capital levels.

Like the recession, this all reminds me of the sign that says ‘free beer tomorrow.’

High oil won’t hurt gdp us as long as the producers are spending their income here.

It will hurt our standard of living and help theirs- real terms of trade and all that.

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