06042021 :: Friday finance

A partial digest:

  • Mortgage applications fell a blended 4% (SA) for the week ending May 28, due to a decrease of 5% in refis and 3% in homebuyer applications. ARM activity fell to 3.7% of all applications from 4% the week prior.

    MBA’s choice for a 30Y fixed benchmark decreased one basis point to 3.17%. The simple national average as reported by Freddie Mac (via FRED) for June 3 rose to 2.99% on the 30Y fixed, up four basis points from that reported the previous week.

    At the same time, the forbearance rate as of May 23 fell ever so slightly to 4.18% as more households made their exit in one way or another. Exits, the good, the bad, and the ugly, slowed further as we marked roughly 14-15 months of being beset by the pandemic in the US.

    The share of households that exited with loan deferrals or partial claims increased, as did the portion exiting with loans paid off through refis or home sales and the segment re-entering mortgage forbearance. This latter percentage climbed for the third consecutive week, indicating that people are struggling more and more to exit—and stay out of—forbearance.

    At the same time, the group that continues to make their monthly payments during their forbearance period fell again.

    MBA estimates that 2.1 million households remain in a state of mortgage forbearance.

    Elsewhere in the housing market, current homeowners remain afraid to trade up given an overheating market, ensuring that things just continue to feed on themselves, for now. Speaking generally, something will have to give.

    CALL: On hold. The trend of megalandlords increasingly making Americans perpetual renters rather than owners of property complicates the housing market picture. However, the bias here will likely lean back towards an incoming housing market correction.
    [tracking: DRV, XLRE, SPG, VNO, WPG, NLY]

Footnotes

1

For global flows, see here; US flows, here.

2

Valenta, Philip. “Death by COVID-19 Hides in Plain Sight.” HedgeHound (June 29, 2020). The research includes the methodology behind the figures presented here every week, as well as information on historical pneumonia trends and death categorization in the US during the global pandemic. It was last updated on December 4, 2020.