Tuesday, February 26, 2008
90 % increase in foreclosures
Repossessions rose 90 percent to 45,327 last month from the same period a year ago, RealtyTrac Inc. said today in a statement. Total foreclosure filings, which include default and auction notices as well as bank seizures, increased 57 percent. What we are seeing is the failure of home owners to make payments on their adjustable rate loans. These loans are resetting at higher rates.
The talking heads are saying this is the bottom, I see another 460 billion dollars of Adjustable loans ready to reset this year and wonder how long this next group will hold on. This is also not considering that most of these homes were purchased at the top of the market and are upside down.
Existing home sales have just fallen to their lowest level in a decade. Standard and Poor's announced that the last quarter of 2007 housing fell 8.9%. The largest single drop in 20 years.
The talking heads are saying this is the bottom, I see another 460 billion dollars of Adjustable loans ready to reset this year and wonder how long this next group will hold on. This is also not considering that most of these homes were purchased at the top of the market and are upside down.
Existing home sales have just fallen to their lowest level in a decade. Standard and Poor's announced that the last quarter of 2007 housing fell 8.9%. The largest single drop in 20 years.
Friday, February 22, 2008
January Import prices soar 13.7%
Inflation, that aint inflation thats just a price adjustment. Yes, we are getting a taste of the value of the dollar. For the past few years the US public has enjoyed our imports from China, the inexpensive and an unexhaustable supply of cheap stuff that we can charge to our credit cards.
Well the flood of US dollars to cover this market has led us to our first rounds of "Price Adjustments." Economists normally call this inflation, and for the most part the backpeddling of the Fed announcing that it could be a little worse that we thought, is probably one of the biggest understatements of the Year.
Looking at Import prices alone, we can see that the January surge of 13.7% is the largest one time price increase since the government started keeping track in 1972.
Lending rates.
US Treasuries are steady this morning, with the 10-yr hovering in the high 3.70's. There is no scheduled economic news, aside from stock markets in Europe and Asia falling overnight. Mortgages, on the other hand, are slightly worse in price after a week of volatility. Prices were helped yesterday by a weak Philly Fed Index result, but lagged Treasury rates. Investor appetite for risk, which includes mortgages, remains low.
Fed funds futures on the Chicago Board of Trade indicate a 94 percent chance policy makers will reduce the target rate for overnight lending between banks to 2.5 percent at its March 18 meeting, compared with odds of 66 percent a week ago. The chance of rates being cut to 2.25 percent are 6 percent, down from 34 percent last week.
Fed policy makers indicated borrowing costs need to be kept low ``for a time". Some foresaw raising interest rates, possibly at a ``rapid'' pace, once the economy recovers. The central bank cut borrowing costs by 125 basis points to 3 percent last month, the fastest easing in almost two decades.
Well the flood of US dollars to cover this market has led us to our first rounds of "Price Adjustments." Economists normally call this inflation, and for the most part the backpeddling of the Fed announcing that it could be a little worse that we thought, is probably one of the biggest understatements of the Year.
Looking at Import prices alone, we can see that the January surge of 13.7% is the largest one time price increase since the government started keeping track in 1972.
Lending rates.
US Treasuries are steady this morning, with the 10-yr hovering in the high 3.70's. There is no scheduled economic news, aside from stock markets in Europe and Asia falling overnight. Mortgages, on the other hand, are slightly worse in price after a week of volatility. Prices were helped yesterday by a weak Philly Fed Index result, but lagged Treasury rates. Investor appetite for risk, which includes mortgages, remains low.
Fed funds futures on the Chicago Board of Trade indicate a 94 percent chance policy makers will reduce the target rate for overnight lending between banks to 2.5 percent at its March 18 meeting, compared with odds of 66 percent a week ago. The chance of rates being cut to 2.25 percent are 6 percent, down from 34 percent last week.
Fed policy makers indicated borrowing costs need to be kept low ``for a time". Some foresaw raising interest rates, possibly at a ``rapid'' pace, once the economy recovers. The central bank cut borrowing costs by 125 basis points to 3 percent last month, the fastest easing in almost two decades.
SP 500 going to have a little trouble with Bond insurers
Looking for the Bond insurers to lead the DJIA lower today. S&P will be feeling it also.
Wednesday, February 20, 2008
Ascending Triangle
Ascending Triangle Look for the approach to the 44.75 price, if there is a lot of volume push then break to new high.
Tuesday, February 19, 2008
The new FHA programs.
Currently the FHA program has no declining value adjustments at the government level, has low down payment and loan to values as high as 97%, cash out refinances allowed to 85%, rate and tern refinances to 97%, total down payment can be a gift, no credit score requirements, no income limits or sales price restrictions, FHA loans are assumable, seller concessions may be as high as 6%, no cash reserves required, non-occupying borrowers are allowed with blended ratios (SFR only), non taxable income (including child support) may be grossed up, and bankruptcies allowed after 2 years. We'll see if investors continue allowing all of these with $729k loan amounts, or if they add "overlays" to restrict underwriting.
This week's economic news.
The yield on the 10-yr is up to 3.86%, and mortgage prices are worse by .250-.375. The only news due out today is the February NAHB housing market index, expected to be unchanged at 19. It measures the general state of the single family home market, and a reading above 50 signals a "good" outlook while a reading below 50 signals a "poor" outlook - it has been below 50 for almost two years. Tomorrow we have the release of the FOMC minutes from the Jan 29/30 meeting, along with the January Consumer Price Index report and Housing Starts. The CPI is expected +0.3% in the overall index and +0.2% in the more important core data. Lastly on Thursday we'll see the Leading Economic Indicators (LEI) report for January. It is an attempt to predict economic activity over the next 3-6 months, and is expected to show a 0.1% decline, meaning that economic activity may slow slightly in the near future.
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