THE BASIS POINT

Weak Jobs/Regulation Hurting Housing

 

MBA Mortgage Applications (week ended 8/8/2014)  

– Purchase Index Week/Week -1.0%. Previous weeks were -1.0%. +0.2%, +0.3%, -8.0%, +4.0%, -1.0%, -1.0%. -5.2%, +9.0%, -4.0%, -1.0%, and -3.0%.

– Refinance Index Week/Week -4.0% . Previous weeks were +4.0%, -4.0%, +4.0%, -0.1%, +0.4%, +0.1%, -1.0%, -13.0%, +11.0%, -3.0%, and -1.0%.

– Composite Index Week/Week -2.7%. Previous weeks were  +1.6%, -2.2%, +2.4%, -3.6%, +1.9%, -0.2%, -1.0%, -9.2%, +10.3%, -3.1%, and -1.2%.

Year-on-year purchase applications are -10.0%.

This data indicates that housing is still hurting.  The problem are both structural and regulatory.  The structural problem is that the economy is not producing enough jobs which pay well enough so that workers can buy houses.  The regulatory problem is that CFPB has tightened mortgage lending standards.

The approach of government will likely be to blame lenders for abiding by the tougher lending standards dictated by CFPB and its QM guidelines.

Business Inventories (June 2014)

– Inventories month/month +0.4%. Previous was +0.5%.

This is a GDP component but it is outpacing Retail Sales and will correct.

 

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