by Calculated Risk on 8/05/2020 07:00:00 AM

From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey

Mortgage applications decreased 5.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 31, 2020.

... The Refinance Index decreased 7 percent from the previous week and was 84 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 22 percent higher than the same week one year ago.

“Mortgage rates dropped to another record low last week, falling below the previous record set three weeks ago to 3.14 percent. Refinance activity decreased – despite the decline in rates – but the current pace remains more than 80 percent higher than a year ago when rates were over 4 percent. MBA’s forecast calls for rates to remain at these low levels, which will continue to spur strong refinance activity and offer homeowners relief in the form of lower monthly mortgage payments during these uncertain economic times,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Purchase applications also fell slightly, but were still 20 percent higher than a year ago and have now risen year-over-year for 11 straight weeks. Purchase loan balances continued to climb, which is perhaps a sign that the still-weak job market and tighter credit for government loans are constraining some first time homebuyers.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) remained unchanged at 3.20 percent, with points increasing to 0.37 from 0.35 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.


The first graph shows the refinance index since 1990.

The refinance index has been very volatile recently depending on rates and liquidity.

But with record low rates, the index is up significantly from last year.

The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is up 22% year-over-year.

Note: Red is a four-week average (blue is weekly).

by Calculated Risk on 8/04/2020 08:43:00 PM

Wednesday:
• At 7:00 AM ET, The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 8:15 AM, The ADP Employment Report for July. This report is for private payrolls only (no government). The consensus is for 1.25 million payroll jobs added in July, down from 2.369 million added in June.

• At 8:30 AM, Trade Balance report for June from the Census Bureau. The consensus is the trade deficit to be $50.3 billion.  The U.S. trade deficit was at $54.6 Billion the previous month.

• At 10:00 AM, the ISM non-Manufacturing Index for July.   The consensus is for a reading of 54.8, down from 57.1.

by Calculated Risk on 8/04/2020 06:19:00 PM

The US is now mostly reporting over 700,000 tests per day. Based on the experience of other countries, the percent positive needs to be well under 5% to really push down new infections, so the US still needs to increase the number of tests per day significantly (or take actions to push down the number of new infections).

There were 696,000 test results reported over the last 24 hours.

There were 52,000 positive tests.

See the graph on US Daily Deaths here.

Click on graph for larger image.

This data is from the COVID Tracking Project.

The percent positive over the last 24 hours was 7.5% (red line).

For the status of contact tracing by state, check out testandtrace.com.

And check out COVID Exit Strategy to see how each state is doing.

by Calculated Risk on 8/04/2020 01:32:00 PM

The FDIC's official problem bank list is comprised of banks with a CAMELS rating of 4 or 5, and the list is not made public (just the number of banks and assets every quarter). Note: Bank CAMELS ratings are also not made public.

CAMELS is the FDIC rating system, and stands for Capital adequacy, Asset quality, Management, Earnings, Liquidity and Sensitivity to market risk. The scale is from 1 to 5, with 1 being the strongest.

As a substitute for the CAMELS ratings, surferdude808 is using publicly announced formal enforcement actions, and also media reports and company announcements that suggest to us an enforcement action is likely, to compile a list of possible problem banks in the public interest.

DISCLAIMER: This is an unofficial list, the information is from public sources only, and while deemed to be reliable is not guaranteed. No warranty or representation, expressed or implied, is made as to the accuracy of the information contained herein and same is subject to errors and omissions. This is not intended as investment advice. Please contact CR with any errors.

Here is the unofficial problem bank list for July 2020.

Here are the monthly changes and a few comments from surferdude808:

Update on the Unofficial Problem Bank List for July 2020. During the month, the list increased by one to 65 banks after one addition. Aggregate assets were little changed at $52.7 billion. A year ago, the list held 75 institutions with assets of $54.7 billion. Added this month was First National Bank of Muscatine, Muscatine, IA ($311 million). The OCC provided an update on July 16, 2020, it is unclear if the update dates back to May 21, 2020, which is the last preceding press release on the OCC website. Historically, the OCC has provided a monthly update, so a bi-monthly update would be a new development.

by Calculated Risk on 8/04/2020 10:59:00 AM

Here is another monthly update on framing lumber prices.   Lumber prices are up 81% year-over-year.

This graph shows two measures of lumber prices: 1) Framing Lumber from Random Lengths through July 31, 2020 (via NAHB), and 2) CME framing futures.

Click on graph for larger image in graph gallery.

Right now Random Lengths prices are up 81% from a year ago, and CME futures are up 60% year-over-year.

There is a seasonal pattern for lumber prices, and usually prices will increase in the Spring, and peak around May, and then bottom around October or November - although there is quite a bit of seasonal variability.

Prices fell sharply due to COVID-19, however prices have roared back (Note: Construction was considered an essential activity in many areas, so construction didn't decline as much as some other sectors).

This is the highest price for Random Lengths lumber, and futures are just below the previous record set in 2018.

by Calculated Risk on 8/04/2020 09:57:00 AM

The BEA released their estimate of July vehicle sales this morning. The BEA estimated light vehicle sales of 14.52 million SAAR in July 2020 (Seasonally Adjusted Annual Rate), up 11.1% from the June sales rate, and down 14.4% from July 2019.

Click on graph for larger image.

This graph shows light vehicle sales since 2006 from the BEA (blue) and an estimate for July 2020 (red).

The impact of COVID-19 is significant, and it appears April was the worst month.

Since April, sales have increased, but are still down 14.4% from last year.

The second graph shows light vehicle sales since the BEA started keeping data in 1967.

Note: dashed line is current estimated sales rate of 14.52 million SAAR.

Light vehicle sales in 2020, to date, total 7.66 million (NSA), down 21.9% from the same period in 2019 with sales of 9.80 million through July (NSA).

by Calculated Risk on 8/04/2020 08:00:00 AM

Notes: This CoreLogic House Price Index report is for June. The recent Case-Shiller index release was for May. The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA).

From CoreLogic: Continued Strength and Resiliency: CoreLogic Reports Home Price Growth Accelerated in June

Nationally, home prices increased by 4.9% in June 2020, compared with June 2019. Month over month, home prices increased 1%, compared with May of this year, the fastest monthly gain for the month of June since 2013.

CoreLogic’s HPI forecast predicts a modest decline in home prices over the twelve months ending June 2021. A sign of a solid foundation and resiliency in the housing market in the face of the pandemic, stronger home prices this summer reflect improved affordability, demographic demands, supply constraints and continued strong interest in purchasing a home. These factors combined to keep home prices steady despite the continued pressure of the pandemic and related economic fall-out.

“Mortgage rates hit record lows this spring, which enhanced affordability for home buyers,” said Dr. Frank Nothaft, chief economist at CoreLogic. “First-time buyers, and millennials in particular, have jumped at the opportunity to achieve homeownership.”

“Home price appreciation continues at a solid pace reflecting fundamental strength in demand drivers and limited for-sale inventory,” said Frank Martell, president and CEO of CoreLogic. “As we move forward, we expect these price increases to moderate over the next twelve months. Given the economic outlook, housing remains a bright spot for the foreseeable future.”
emphasis added

CR Note: The overall impact on house prices will depend on the duration of the crisis.

by Calculated Risk on 8/03/2020 09:17:00 PM

Tuesday:
• 8:00 AM ET, Corelogic House Price index for June

• Early, Light vehicle sales for July from the BEA. The consensus is for light vehicle sales to be 13.1 million SAAR in July, up from 13.0 million in June (Seasonally Adjusted Annual Rate).

by Calculated Risk on 8/03/2020 06:00:00 PM

The US is now reporting over 700,000 tests per day. Based on the experience of other countries, the percent positive needs to be well under 5% to really push down new infections, so the US still needs to increase the number of tests per day significantly (or take actions to push down the number of new infections).

There were 731,690 test results reported over the last 24 hours.

There were 49,561 positive tests.

See the graph on US Daily Deaths here.

Click on graph for larger image.

This data is from the COVID Tracking Project.

The percent positive over the last 24 hours was 6.8% (red line).

For the status of contact tracing by state, check out testandtrace.com.

And check out COVID Exit Strategy to see how each state is doing.

by Calculated Risk on 8/03/2020 04:00:00 PM

Note: This is as of July 26th.  The report next week (through Aug 2nd) might show some impact from the delay of the disaster relief package.

From the MBA: Share of Mortgage Loans in Forbearance Decreases for Seventh Straight Week to 7.67%

The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 7 basis points from 7.74% of servicers’ portfolio volume in the prior week to 7.67% as of July 26, 2020. According to MBA’s estimate, 3.8 million homeowners are in forbearance plans.
...
“The share of loans in forbearance declined, but we are now seeing a notable pattern developing over the past two weeks. The forbearance share is decreasing for GSE loans but has slightly increased for Ginnie Mae loans,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “The job market has cooled somewhat over the past few weeks, with layoffs increasing and other indications that the economic rebound may be losing some steam because of the rising COVID-19 cases throughout the country. It is therefore not surprising to see this situation first impact the Ginnie Mae segment of the market.”

Added Fratantoni, “The higher level of Ginnie Mae loans in forbearance will increase the amount of payments that servicers must advance. We continue to monitor servicer liquidity during these challenging times.”
emphasis added

Click on graph for larger image.

This graph shows the percent of portfolio in forbearance by investor type over time.  Most of the increase was in late March and early April, and has been trending down for the last seven weeks.

The MBA notes: "Total weekly forbearance requests as a percent of servicing portfolio volume (#) decreased relative to the prior week from 0.13% to 0.10% – the lowest level reported since early March."