Presidents Keep Their Jobs If Voters Keep Theirs
Refi Rates Continue, But Who Qualifies?
The difference between 2-yr and 10-yr yields is the flattest since October, signifying the potential for deflation and evening the playing field between ARM and fixed-rate mortgages. This especially impacts folks looking to refinance. Interestingly, according to The Royal Bank of Scotland, about 37% of the mortgage market is “truly refinanceable” at current rates. If mortgage rates improve .25%, RBS calculate that around 51% of the market would enter this camp. But borrowers and properties still must qualify and deal with higher fees.
And will those borrowers looking to refinance, or obtain a loan on a purchase, be doing it in person or on line? Kate Berry with American Banker suggests that most bankers agree that online lending applications can attract customers and drive up volume, but few actually offer such services. At this point the majority of lenders either already offer or know that they have to offer some type of interactive, online mortgage application at some point in the future. But per a recent study, only 18% actually offer applications online now. Many offer only a basic form that borrowers must download and print, and then an employee must re-enter the data manually later. Of course, one problem is that liens and mortgages still must be “wet signed,” and few counties and municipalities will accept an electronic signature on a mortgage because they do not have the technology infrastructure. Loan officer should know that, per the article, “online application volume is expected to triple by 2013 with volume growing from just 4% this year, to 13% of total volume”. Lenders still expect loan officers to be the dominant channel, accepting 57% of all mortgage applications by 2013, down from 67% this year. And employees who work at bank branches are expected to originate roughly 13% of mortgage applications by 2013, the same as this year. Four of the top 10 residential lenders dominate online originations: Quicken, JPMorgan Chase, PHH, and SunTrust.
Presidents Keep Their Jobs If Voters Keep Theirs
Today we had the unemployment data, which inevitably brings up a status report on how the administration’s efforts are going with job creation. If one thinks about it, however, the President of the United States has very little effect on the economy – much less so than the Chairman of the Federal Reserve Ben Bernanke or Congress. The President’s popularity, however, is greatly impacted by the economy. Although through speeches and actions the President can influence the confidence of citizens, the President does not directly create significant numbers of jobs. And certainly confident consumers help the economy, but entrepreneurs and companies are the ones that create jobs based on the economic climate. Congress, of course, is involved with tax cuts or increases, tariffs, etc.
Stocks Down, Rates Down
The pattern continues: stocks go down, bond prices go up (and thus rates go down). Hmmm, let’s see. The S&P and DJIA dropped 10% last quarter. Yesterday we learned that Pending Sales of Existing Homes Fell 30% in May, the biggest on record since 2001. (And Pending Home Sales are a precursor to Existing Home Sales.) The Institute for Supply Management’s manufacturing gauge fell, and Jobless Claims increased. The yield on the 10-yr risk-free Treasury note touched 2.92%. All of this has economists wondering if we’re entering another round of recession, or if a quick economic downturn is typical of any expansion.
With the drop in rates came selling from investors, money managers, and mortgage bankers – it would appear that locks are picking up. Let’s hope that the new locks aren’t coming from some other lender’s existing pipeline, and vice versa! Originations were believed to be heavier at $2.5 to $3 billion, causing mortgage prices to “widen out” versus Treasury prices early in the day – one trader said that “You couldn’t give away a mortgage this morning.” Fortunately for mortgage prices this situation changed mid-Thursday and rates improved slightly.
BLS Payrolls Report
This week we had a weak ADP jobs number, and a week Jobless Claims number. Today Nonfarm payrolls, projected to have contracted 110k with private payrolls growth at +112k, came in at -125,000, the Unemployment Rate dropped to 9.50%, and Hourly Earnings rose again +.1%. There were some back-month revisions higher. Later on we’ll have Factory Orders – and then look for the bond market to get very quiet as folks head out for a three day weekend. Ahead of the numbers, the 10-yr was yielding 2.95%, and dropped to 2.92% after the numbers. Mortgage prices are slightly better.
Daily Humor
Men are not mind readers.
Ask for what you want. Let us be clear on this one: Subtle hints do not work! Strong hints do not work! Obvious hints do not work! Just say it!
Come to us with a problem only if you want help solving it. That’s what we do. Sympathy is what your girlfriends are for.
Learn to work the toilet seat. You’re a big girl. If it’s up, put it down. We need it up, you need it down. You don’t hear us complaining about you leaving it down.
“Yes” and “no” are perfectly acceptable answers to almost every question.
Anything we said 6 months ago is inadmissible in an argument.
If something we said can be interpreted two ways and one of the ways makes you sad or angry, we meant the other one.
You can either ask us to do something, or you can tell us how you want it done. Not both. If you already know best how to do it, just do it yourself.
If we ask what is wrong and you say “nothing,” we will act like nothing’s wrong. We know you are lying, but it’s just not worth the hassle.
If you ask a question you don’t want the answer to, expect an answer you don’t want to hear.
And when we have to go somewhere, absolutely anything you wear is fine. Really.