The Case-Shiller repeat home sales numbers are out for May (yes, it is almost August). It shows home price growth slowing to 3.69% YoY in May.
The smallest gain in home prices is in Chicago (1.3% YoY) while the largest gain is in Phoenix AZ (9.0% YoY).
You can see the enormous home price bubble in both Chicago and Phoenix in 2005-2007 but the Phoenix bubble is far greater. Phoenix has recovered almost to bubble highs while Chicago is suffering from an exodus due to a broken pension system and plague-like taxes.
Chicago is going to need Snake Plisken to escape Mayor Lori Lightfoot, the Duke of Chicago.
The Atlanta Fed GDPNow estimate for Q2 GDP is -41.907%.
Why will Q2 look like a disaster? Take a peek at April’s preliminary durable goods orders: down -17.2%. Take out transportation and the decline is “only” -7.4%. In other words, the print (actual) are lower than the surveys. And while jobless claims clocked in at 2.12 million, it is the first decline in jobless claims so far.
According to the GSEs, they will charge a loan-level price adjustment of 500 basis points (5%) for loans where the borrower is a first-time homebuyer. For all other loans, the GSEs will charge 700 basis points (7%).
That means it will cost lenders either 5% or 7% of the loan’s value to sell the loan in forbearance to the GSEs.
That’s a steep cost. On a $200,000 loan to a first-time homebuyer, for example, it would cost the lender $10,000 to sell the loan, meaning the lender is losing money on that loan. And for a loan that touches the GSEs’ loan limit of $510,400, a lender could have to pay nearly $36,000 for a GSE to buy the loan.
On the other hand, the alternative would be for the lender to keep a delinquent loan on their books. This solution at least allows the lender to sell the loan and preserve some liquidity, as the FHFA noted.
(Bloomberg) — U.S. loan applications for buying and refinancing homes plunged last week by the most since the global financial crisis, amid coronavirus shutdowns and related financial turmoil that pushed borrowing costs higher.
The Mortgage Bankers Association’s index of applications fell 29.4% in the week ended March 20, the biggest decline since early 2009. Home-purchase applications dropped by 14.6% while refinancing applications plummeted 33.8%.
The average contract rate on a 30-year fixed mortgage increased 8 basis points to a two-month high of 3.82%, despite the Federal Reserve cutting the benchmark interest rate to near zero.
The decline in applications is an early sign suggesting home sales will slow and that refinancings are coming off a spike. That follows other data indicating a precipitous dropoff in business activity this month as stores and schools shutter to prevent the spread of the virus.
Yes, MBA mortgage applications fell the most since 2009 and the financial crisis.
Mortgage rates actually rose last week (yellow line) but will likely decline this week.
The biggest decline came in mortgage refinancing applications, down 33% WoW.
I want to thank Rick Sharga for remembering that I was one of the few that predicted what is happening today with interest and mortgage rates while most others predicted mortgage rates would rise above 8%.