The other day a Radio Shack employee was arrested after
punching a customer who was trying to return an item. The employee was charged
with assault, but since it's Radio Shack, battery was not included. (Bah da
bum!)
What is the deal with these interest rates? Or perhaps the
better question might be, is anyone surprised that with the economy showing
signs of life, and the tremendous amount of supply hitting the market, rates
have moved higher? And this is even with the Fed buying securities.
Yesterday mortgage investors worsened prices, and prior to the unemployment
data this morning the new 10-yr was sitting at 3.35%, the highest level since
before Thanksgiving. Gold is well above $900 an ounce, and oil is above $57 per
barrel.
Things appear to be improving slightly in the jobs
market. The unemployment numbers came out, and employers cut a
“smaller-than-expected” 539,000 jobs in April, the smallest amount
since October. The Unemployment Rate, however, which tends to grab
headlines, shot up to 8.9% as expected, the highest since September 1983. The
March number was revised from a drop of 663k to show a decline of 699,000, and
February was revised from a drop of 651k to 681,000. For the April number,
experts were expecting a drop of about 600k. All sectors lost jobs except
for the government and education & health services areas. After the
numbers we find mortgage prices worse by .125-.250 yet the 10-yr is back down
to 3.28%.
The House of Representatives approved a measure that
would force mortgage lenders to retain a 5% stake in home loans they make,
securitize and then sell to investors. (I imagine that this does not include
brokers or small bankers, but I don’t know.) In addition, mortgage
brokers would face tighter oversight and lenders would have to prove that
homeowners are well-served when they refinance a home loan under the rule. The
legislation would also help renters fight eviction when their landlords default
on their mortgages. Remember, however, that there is no equivalent Senate
legislation, but this certainly shows where some in Congress feel mortgage
lending is heading.
With investors moving into the $729, 750 loan space, it
takes some of the pressure off of agents who have specialized in high balance
loans. The jumbo market, however, as best as I can tell is showing no signs
of coming back soon. Hopefully I am wrong. Agents and brokers are seeing
their best high net worth and self employed clients search for loans in local
or community-based banks, who in turn are being very selective about to whom
they lend. But as most know, any small bank is going to come up against lending
limits based on their capital and deposits. I suspect that with client
deposits on the decrease bank lending limits have decreased as well. Certainly,
on the TPO side of the business, there is no viable active secondary market,
which of course in reflected in the “dogmeat” pricing.
A man is driving down the road.
A woman is driving up the same road.
They pass each other.
The woman yells out the window, “PIG!”
The man yells out window, “Tramp!”
The man rounds next curve and crashes into a HUGE PIG in
middle of road and dies.
Thought For the Day:
If men would just listen!!!
Rob
(For archived commentaries, check www.robchrisman.com,
or to subscribe write to rchrisman@robchrisman.com)
