by Calculated Risk on 1/31/2007 09:59:00 AM

The Mortgage Bankers Association (MBA) reports: Refinance and Purchase Applications Both Increase

Click on graph for larger image.

The Market Composite Index, a measure of mortgage loan application volume, was 631.3, an increase of 3.2 percent on a seasonally adjusted basis from 611.3 one week earlier. On an unadjusted basis, the Index increased 5.9 percent compared with the previous week and was up 0.7 percent compared with the same week one year earlier.

The Refinance Index increased by 4.9 percent to 1940.2 from 1848.8 the previous week and the seasonally adjusted Purchase Index increased by 1.3 percent to 408.0 from 402.7 one week earlier.

Mortgage rates were mixed:

The average contract interest rate for 30-year fixed-rate mortgages increased to 6.29 from 6.22 percent ...

The average contract interest rate for one-year ARMs decreased to 5.86 percent from 5.91 ...

The second graph shows the Purchase Index and the 4 and 12 week moving averages since January 2002. The four week moving average is up 0.1 percent to 430.8 from 430.5 for the Purchase Index.

The refinance share of mortgage activity decreased slightly to 47.4 percent of total applications from 47.8 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 21.4 from 20.3 percent of total applications from the previous week.

by Calculated Risk on 1/31/2007 01:38:00 AM

Jim Clash interviews Sasha (part II)

Part I was here.

by Calculated Risk on 1/30/2007 06:43:00 PM

From MarketWatch: Dimon sees a sign of recession

Rising defaults in some of the riskiest home loans offered by J.P. Morgan Chase & Co. signal a recession may be looming, Jamie Dimon, the bank's chief executive said Tuesday.

Dimon, speaking at Citigroup's annual financial services conference, said high-risk loans - as measured by credit scores and loan-to-value ratios of 90% or more -- make up 2% of the bank's home equity portfolio, Dimon said according to a live webcast.

He also said defaults are rising at J.P. Morgan "a little bit," adding, "home equity is subject to deterioration" from a recession, but that the bank is well positioned to sustain a downturn in the economy. The bank has largely exited the subprime lending area.

Did someone just say "credit crunch"?

by Calculated Risk on 1/30/2007 04:28:00 PM

"We've never had a decline in housing prices on a nationwide basis. What I think is more likely is that house prices will slow, maybe stabilize ... I don't think it's going to drive the economy too far from its full-employment path, though."
Dr. Bernanke, July 29, 2005

From the AP: Thumbs Up for Bernanke on First Year

The economy tested Federal Reserve Chairman Ben Bernanke during his first year on the job. A sinking housing market and a troubled auto industry threatened to short-circuit economic activity. Gyrating energy prices threatened as well.

By most accounts, the Fed chairman passed.

Although I've disagreed with Bernanke at times, I think he deserves credit so far. I included the above quote as a point of disagreement - I expect we will see housing prices decline on a nationwide basis in 2007.

I'd also argue that Bernanke hasn't been tested yet. From Stephen Roach in late 2005:

"Alan Greenspan faced a stock-market crash two months after he took over in August 1987. Paul Volcker had to cope with a rout in the bond market three months after he became chairman in August 1979. G. William Miller was challenged immediately by a dollar crisis in the spring of 1978. For Arthur Burns, it was the inflation bogie in the early 1970s."

So far Bernanke hasn't faced anything like the challenges of his predecessors, but I do feel a little vindicated for supporting his nomination.

by Calculated Risk on 1/29/2007 05:02:00 PM

The Census Bureau reports the Homeowner Vacancy Rate was a record 2.7% in Q4 2006.

Click on graph for larger image.

This graph shows the recent surge in the homeowner vacancy rate. This is further evidence of the significant supply overhang in the housing market.

Fannie Mae economist David Berson has estimated the overhang at 600K units. This data from the Census Bureau suggests the overhang may be closer to my estimate of 1.1 to 1.4 million units.

Update: For a 50 year chart see: Empty homes everywhere