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 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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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.

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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.

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ADP Employment Change (Nov)

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

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

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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.

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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.

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Factory Orders (Oct)

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

Boring, and not worse than Fed forecasts.

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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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From late yesterday..

ABC Consumer Confidence (Dec 2)

Survey	n/a
Actual	-24
Prior	-21
Revised	n/a

This is a function of CNBC’s reporting bias.

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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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