Mortgage Apps +4.7%, Pulte Buying Centex, Loan Lock Jargon
Pulte Buying Centex
Pulte Homes Inc. (Michigan) agreed to buy Centex Corp. (Dallas) for $1.3 billion in an all-stock deal. Pulte agreed to pay 0.975 of a share for each Centex share, valuing Centex at $10.50, or 38 percent more than yesterday’s closing price. The transaction, already approved by both companies’ boards but yet to be voted on by stockholders, includes $1.8 billion in net debt but with $3.4 billion in cash and $4.1 billion in market value.
Mortgage Apps +4.7%
In other news, mortgage applications in the U.S. rose last week to the highest level in three months: +4.7%. The Mortgage Bankers Association’s index of applications to purchase a home was +11% and the refinance index was +3.2%.
Mandatory vs. Best Execution
Lock desks around the nation are seeing the spread in price between mandatory and best efforts execution narrowing. And companies that were thinking about moving to mandatory execution, strictly based on price rather than business model, are re-evaluating the merits of doing so. A month or so ago the price difference was well over a point, and although not all of this was being passed through to agents and brokers, originators who were hedging and doing mandatory sales definitely had the upper hand when it came to comparing rate sheets. Now that spread has narrowed, perhaps due to lower volatility or better pull through (leading to lower hedging costs). Overall the spread is now around 1 point in price and in some cases slightly less.
10yr Yields Quiet
What else is going on? Not much. Today we have a $35 billion 3-yr T-Note auction to get through. We also have, at 11AM PST, 2PM EST, the FOMC minutes from their mid-March meeting. No one is expecting too many surprises. Aside from that, the “mortgage scene” is quiet, with mortgage prices slightly better than yesterday afternoon and the 10-yr at 2.87%.
Daily Humor
Brenda O’Malley is home making dinner, as usual, when Tom Finnegan arrives at her door.
“Brenda, may I come in?” he asks. “I’ve somethin’ to tell ya”.
“Of course you can come in, you’re always welcome, Tom. But where’s my husband?”
“That’s what I’m here to be telling ya, Brenda.” There was an accident down at the Guinness brewery…”
“Oh, God no!” cries Brenda. “Please don’t tell me.”
“I must, Brenda. Your husband Shamus is dead and gone. I’m sorry.”
Finally, she looked up at Tom. “How did it happen, Tom?”
“It was terrible, Brenda. He fell into a vat of Guinness Stout and drowned.”
“Oh my dear Jesus! But you must tell me truth, Tom. Did he at least go quickly?”
“Well, Brenda… no. In fact, he got out three times to piddle.”