MBA: Mortgage Purchase Applications Decreased Sharply -18.1%, Lowest Since 1995 (Down -41% YoY, Refi Apps Down -72% YoY)

Mortgage rates increased across all loan types last week, with the 30-year fixed rate jumping 23 basis points to 6.62 percent – the highest rate since November 2022. The jump led to the purchase applications index decreasing 18 percent to its lowest level since 1995.

Mortgage applications decreased 13.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 17, 2023.

The Market Composite Index, a measure of mortgage loan application volume, decreased 13.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 4 percent compared with the previous week. The Refinance Index decreased 2 percent from the previous week and was 72 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 18 percent from one week earlier. The unadjusted Purchase Index decreased 4 percent compared with the previous week and was 41 percent lower than the same week one year ago.

Did Biden appoint “Pothole Pete” Buttigieg to oversee the mortgage market??

The Thrill Is Gone! US Existing Home Sales Crash -37% YoY In January (Median Price YoY Falls To 0.67%) As The Fed’s Thrill Is Gone

The thrill is gone from housing as The Fed tightens away.

Well, January’s existing home sales numbers were horrific. Down -37% year-over-year (YoY) and down -0.7% MoM.

The median price of existing home sales fell to 0.67% YoY.

I am now posting my Podcasts on Spotify.

But before I go for experimental therapy for my brain tumor, I will leave you with this diddy. Inflation expectations are on the rise, not falling like Biden and Yellen keep screaming.

Shot Through The Heart! US Bankrupties Had Worst Start To 2023 Since 2010 (US Credit Card Delinquencies Growing At Fastest Rate Since 2010 Too)

The US economy, despite the tight labor market, has been shot through the heart by Biden’s economic policies. The Biden Administration (aka, Obama’s third term as President) is giving government a bad name.

On the corporate side, US bankruptcies in 2023 had the worst start to a year since 2010 and the financial crisis.

On the personal finance side of the ledger, the delinqueny rate on credit cards is growing at the faster rate since 2010.

Throw in 22 straight months of negative REAL wage growth, and have a scary situation facing middle America.

And the shate of outstanding subprime auto debt (30 days or more delinquent) is up to the highest rate since … well, you know when. The financial crisis of 2009-2010.

The US middle class is living on a prayer, because Washington DC doesn’t care.

But don’t worry. Mayor Pete, the EPA and Ohio governor Mike DeWine claim the air is good to breath and the water safe to drink in East Palestine Ohio.

Why isn’t Greta Thunberg racing to Ohio to protest the dumping of toxic chemicals?

US Mortgage Applications Decline 7.7% From Last Week As Fed Continues Their Counterattack On Inflation (Purchase Apps Down 43% From Last Year, Refi Apps Down 76%)

US inflation is causing The Federal Reserve to raise interest rates, and mortgage applications are suffering.

Mortgage applications decreased 7.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 10, 2023.

The Refinance Index decreased 13 percent from the previous week and was 76 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 6 percent from one week earlier. The unadjusted Purchase Index decreased 5 percent compared with the previous week and was 43 percent lower than the same week one year ago.

The MBA contract rate rose 3.4% from 6.18% to 6.39% as The Fed tightens.

And if you believe the Taylor Rule (as opposed to The Fed’s current politically-based decisions), The Fed’s target rate should be 10.15% and The Fed is less than half way there at 4.75%.

The Fed is expected (by investors in Fed Funds Futures) to rise to 5.283% by the July FOMC meeting, then decline to under 5% by January ’24.

Speaking of Fed rate hikes, January’s red hot retail sales (up 3% MoM) is surely going to drive inflation UP and The Fed will keep raising rates.

Inflation Nation! US REAL Average Hourly Earnings Negative For 22 Staight Months In January As Inflation Heats Up … Again (CPI Rises 0.5% MoM, Food Rises 11.3% YoY)

The January US inflation numbers are out and they were grim.

US REAL average hourly earnings fell … again … to -1.8% year-over-year (YoY) from a revised -1.6% YoY in Deember. That makes 22 straight months of negative hourly earning growth.

CPI Month-over-month (MoM) was revised upward for December, and increased from 0.1% in December to 0.5% in January. CORE CPI remained unchanged from the upward revision in December to 0.4% MoM.

Components of inflation include FOOD AT HOME (up 11.3% YoY), utility (piped) gas service (up 26.7% YoY) and shelter (up 7.9% YoY). So, the middle-class inflation tax (food, heating, housing) remains high.

Do I detect a trend in shelter inflation??

Hey, I thought Treasury Secretary Janet Yellen said inflation was transitory. 22 straight months of negative hourly earnings growth seems more permanent than transitory.

The West Is A Mess! US Home Prices Decline From 2022 Peak Most In The Western US (SF Down -13%, Seattle Down -11.3%, Phoenix Down -10.5%)

Black Knight’s December Mortgage Report is out and the house price graphs show the west is a mess.

While much of the US is down from 2022 peaks in home price. but it is The West where home prices are down the most (just like 2008 where the Inland Empire of California, Phoenix and Las Vegas crashed in term of home prices).

At least Columbus Ohio is down only -2.1% from the 2022 peak. While Austin TX is down almost -10% from 2022 peak.

US inflation numbers are out tomorrow. Let’s check on home price and rent growth tomorrow. But the forecast for January inflation is a increase.

Fed Tightening Pushed Fed Funds Target Rate Above MBS Yields For First Time In History (Biden Administration Ready To Unleash A $27 Billion Green Slush Fund)

The most recent tightening by the Federal Reserve has pushed the federal funds target rate above mortgage-backed securities yields for the first time in history. Though this poses clear challenges of carry for MBS holders, selective investments in specified pool and collateralized mortgage obligations (CMOs) could provide incremental returns.

While Biden brags (redundant) about lowering inflation (that his energy policies and massive Federal spending caused), apparently he never learns. Now we learn from Mish that the Biden Administration is ready to unleash a $27 billion green slush fund on the US middle class.

Inflation started under Biden, but the massive expansion in money supply (M2) begin with Covid in 2020.

Once this latest spending splurge kicks in, we will see rising inflation again. After all, Biden and Congress have gotten the taste for massive spending bills (like vampires) and spending likely won’t slow down.

Don’t Be Misled By The Low US Unemployment Rate, It Goes Low Just Prior To A Recession (Treasury Curve Remains Deeply Inverted, Mortgage Rates Rise)

Biden’s State of the Union address saw him bragging about his record job creation (actually, it was the private sector, not Biden than created jobs) and historic unemployment rate. What Biden didn’t mention (along with not discussing the porous Mexican border with fentanyl pouring across or why he failed to shoot down a Chinese spy balloon until after it has passed over numerous military reservation) is that the unemployment rate always hit a low point just prior to a recession.

So, here we sit at 3.4% unemployment. But we also see the US Treasury yield curves (10Y-3M and 10Y-2Y) remaining deeply inverted.

The US Treasury 10-year yield is up 5.5 basis points today.

And Bankrate’s 30-year mortgage survey rate is up slightly today.

Help US, McCarthy! Price of Insuring Against US Debt Default Remains Elevated As No End In Sight (Effective Rate Of Interest On US Mortgage Rate Rises)

Everyone seems to have amnesia about Joe Biden’s hatred of Social Security and Medicare. He has tried to cut Social Security, Medicare and Veteran’s benefits as a US Senator. In addition, it was Biden that led the charge to TAX Social Security benefits for seniors. Now Biden has pivoted and is claiming that Republicans are the ones that want to cut Social Security. Wow. Biden simply goes where the political winds blow.

Here is where we set today. The cost of insuring for a US debt default remains elevated as the US has hit its statutory debt limit. This is happening at the effective rate of interest on US mortgage debt is rising.

Help us McCarthy! Because Biden and Schumer don’t want to cut ANY spending.

We need somebody like Mr. Garvey from Key and Peele to lead the debt ceiling debate.

But never fear! Congress LOVES to spend your money, so will eventually raise the debt ceiling.

Just Like The Fed! Despite Cooling Inflation, Forecasts Of Fed Rate Hikes Increase To Peaking In July 2023

It’s just like The Fed to ignore what is going on and do something else.

The one statement that Biden made in his State of the Union Address that was factually accurate was that inflation is coming down. Of course, he then blew it by saying he inherited inflation from Trump which was not true. Headline inflation (CPI YoY) was only 1.4% when Biden was sworn-in as President and rose to 9.1% YoY by June 2021 before finally starting to decline.

But despite the cooling of inflation (and M2 Money growth), The Fed seems hell bent on increasing their target rate, now forecast by Fed Funds Futures to peak in July 2023 at 5.123% before pivoting.

The Fed’s themesong. Drinking with my low-companions, dancing with a woman that’s not my wife, laughing at a joke I’ve heard before, welcome to a night in their life.