Sunday Is Talk Like A Pirate Day, 70% Say It’s Good Time To Buy A House (and other survey stats)

Don’t forget Sunday is Talk Like A Pirate Day. Here’s another joke to celebrate the occasion and a couple more below. A pirate with an eye patch seemed sad at a bar. The bartender asked, “What’s wrong?” The pirate replied, “Arrrgh, they wanted me to be a teacher – but I only had one pupil!”

Consumer Opinions on Home Ownership
Fannie Mae released its most recent housing survey, which tends to be a little more optimistic. “These findings indicate the return of a more balanced and realistic approach to housing.” Check out this fact sheet with core findings of the consumer survey.

There are many advantages to home ownership, such as potential appreciation, tax breaks, and forced savings. But if pressed, most folks in the mortgage industry admit that not everyone should be able to buy a home, regardless of government mandates. The American dream of owning a home has lost some of its allure after years of falling home prices and owners facing financial ruin. Per Fannie’s study, the number of people who say they consider housing a safe investment continues to decline, falling to 67% in July from 70% in January and 83% in 2003. In the US, 70% said it’s a good time to buy, up from 64% in January-but the number of households that say they are more likely to rent than to buy a home rose to 33%. Between households paying down debt and preferring to rent, waiting for prices to level off and begin generally improving, or not being able to buy a house due to stricter underwriting guidelines, perhaps home ownership is returning to a more “normal” equilibrium.

Consumer Opinions On Underwater Mortgages
Learning is a constant activity in mortgage banking. Should an originator or broker shrug and ignore stories about how more than one-third of Americans say it’s acceptable under some circumstances to stop paying a mortgage and walk away from the home? (“While 59% of those surveyed said its “unacceptable” to abandon a home loan, 19% said it was ‘acceptable’ and another 17% said it depends on the circumstances” – this from the Pew Research Center.) Of the respondents, 63 percent own homes and 31 percent are renters. About 14% of home loans were delinquent or in foreclosure at the end of June. The problem is that, of course, “What investor wants to own a pool of mortgages filled with loans to borrowers who don’t give a rat’s rump about making their payments?” Investor’s perceptions can directly impact mortgage rates.

Are Fannie & Freddie Gain or Loss for Govt?
Are Freddie and Fannie “all clear”, and done with government/taxpayer support? It doesn’t sound like it. “F&F could cost the government $53 billion through 2020 or save the government as much as $44 billion, depending on the accounting principles used, per the Congressional Budget Office.

Economic Stat Roundup
Yesterday’s Jobless Claims data, although “not bad” is not the kind of data that indicates that our unemployment rate is dropping. And the housing industry is looking for employment to improve in order to push the housing market. We know that claims shot up above 500,000 several weeks ago on a host on special factors, which are now dissipating. Stepping back, the four week moving average, which smoothes out the seasonal volatilities, is running at 465,000 – not enough to push next month’s Non-farm Payroll number much above an increase of 100k.

We also had the Philadelphia Fed’s General Business Conditions Index rise slightly but remaining below its neutral threshold of zero for the second consecutive month. Regardless, Treasury 10-Year yields went up on the number (and jobless claims), and $2.5 million, uh, billion, of MBS’s was sold. This increase of supply has not helped mortgage rates – overall for the week, daily supply on average has been $2.6bln – not unmanageable; however, when it approaches $3 billion it tends to edge above the amount of demand/buyer interest.

This morning’s Consumer Price Index number was +.3%, and ex-food & energy it was unchanged. Year-over-year the number was up about 1%, close to what was expected. The inflation data have been of diminished significance recently – inflation is not viewed as a problem when talk of further recession is much more relevant. Later we have the first September reading on Consumer Sentiment (expected to improve), but for now the 10-yr yield stands at 2.73% and mortgages are slightly worse.

Couple More Jokes To Celebrate Talk Like A Pirate Day on Sunday
What’s a pirate’s favorite letter…”Rrrrr”. What’s his 2nd favorite letter? It is a “P” because it’s an “Rrrr” with no leg.

A pirate walks into a bar with a steering wheel sticking out of the zipper of his pants.
The bartender asks “what that steering wheel doing in your pants?”
The pirate answers, “Aaaarg, it’s driving me nuts”.