by Calculated Risk on 12/26/2009 11:30:00 AM

From Dina ElBoghdady at the WaPo: Freddie sees mortgage rates hitting 6% in 2010

[T]he average rate on a 30-year, fixed-rate mortgage rose to 5.05 percent this week and could climb to 6 percent by the end of 2010, if not sooner, according to giant mortgage financier Freddie Mac.
...
The key catalyst for interest rates going forward will be the end of a Federal Reserve program that buys a sizable chunk of mortgage-backed securities issued by firms such as Fannie Mae and Freddie Mac. ... the Fed has committed to winding down the program by March.
...
Amy Crews Cutts, deputy chief economist at Freddie Mac, said interest rates are bound to rise to 6 percent by the end of 2010 because private buyers will demand a higher rate of return on the securities than the Fed did.

This is similar to the comments made by Mark Zandi of economy.com earlier in the week:

"If you told me by the end of 2010 a 30-year rate was at 6 percent, that sounds about right," says Mark Zandi, chief economist at Moody's. "I don't think there's any question rates are headed up."

Rates are definitely moving up, and they will move higher as the Fed winds down the MBS purchase program. Although 6% is possible, I'll take the under in 2010. The reason is I think the recovery will be sluggish and choppy - and that will keep rates down.

Note: Some people think 30 year mortgage rates will increase 100 bps or even 200 bps when the Fed stops buying MBS - so they expect 6% to 7% mortgage rates by April - but I think that estimate is too high.

by Calculated Risk on 12/26/2009 07:49:00 AM

Something every saver knows ...

From Stephanie Strom at the NY Times: At Tiny Rates, Saving Money Costs Investors

The elderly and others on fixed incomes have been especially hard hit. Many have seen returns on savings, C.D.’s and government bonds drop to niggling amounts recently ...

" ... what’s going to happen now as C.D.’s mature is that retirees and the elderly are going to take anywhere from a half to three-quarters ... cut in their incomes,” said Joe Parks, a retired accountant in Houston ...

“What the average citizen doesn’t explicitly understand is that a significant part of the government’s plan to repair the financial system and the economy is to pay savers nothing and allow damaged financial institutions to earn a nice, guaranteed spread,” said [Bill Gross of PIMCO] ... Mr. Gross said he read his monthly portfolio statement twice because he could not believe that the line “Yield on cash” was 0.01 percent. At that rate, he said, it would take him 6,932 years to double his money.

That is what my statement says too - not exactly the best return. But in less than 7,000 years the money will double!

by Calculated Risk on 12/25/2009 10:06:00 PM

The FDIC is on holiday, but not surferdude808 (He says Merry Christmas!)

This is an unofficial list of Problem Banks compiled only from public sources.

Changes and comments from surferdude808:

Last week’s closures had a large impact on the Unofficial Problem Bank List. Seven institutions with $14.5 billion in assets were removed from last week’s list because of failure.

The failures included First Federal Bank of California ($6.1 billion), Imperial Capital Bank ($4.1 billion), Peoples First Community Bank ($1.8 billion), New South Federal Savings Bank ($1.5 billion), Independent Bankers' Bank ($584 million), and Rockbridge Commercial Bank ($294 million). Other removals include Manatee River Community Bank ($152 million), which merged with First America Bank, Osprey, FL; and Golden First Bank ($25 million), as the OTS terminated its formal action.

Regulators did deliver some not so good Christmas gifts this week as formal actions were issued to three institutions including Midwest Bank and Trust Company, Elmwood Park, IL ($3.5 billion); Centrue Bank, Streator, IL ($1.3 billion); and Bayside Savings Bank, Port Saint Joe, FL ($86 million).

With these changes, the Unofficial Problem Bank List includes 545 institutions with aggregate assets of $295.6 billion.

The list is compiled from regulator press releases or from public news sources (see Enforcement Action Type link for source). The FDIC data is released monthly with a delay, and the Fed and OTC data is more timely. The OCC data is a little lagged. Credit: surferdude808.

See description below table for Class and Cert (and a link to FDIC ID system).

For a full screen version of the table click here.

The table is wide - use scroll bars to see all information!

NOTE: Columns are sortable - click on column header (Assets, State, Bank Name, Date, etc.)




Class: from FDIC

The FDIC assigns classification codes indicating an institution's charter type (commercial bank, savings bank, or savings association), its chartering agent (state or federal government), its Federal Reserve membership status (member or nonmember), and its primary federal regulator (state-chartered institutions are subject to both federal and state supervision). These codes are:

N National chartered commercial bank supervised by the Office of the Comptroller of the Currency

SM State charter Fed member commercial bank supervised by the Federal Reserve

NM State charter Fed nonmember commercial bank supervised by the FDIC

SA State or federal charter savings association supervised by the Office of Thrift Supervision

SB State charter savings bank supervised by the FDIC

Cert: This is the certificate number assigned by the FDIC used to identify institutions and for the issuance of insurance certificates. Click on the number and the Institution Directory (ID) system "will provide the last demographic and financial data filed by the selected institution".

by Calculated Risk on 12/25/2009 05:00:00 PM

A holiday tradition - from Tanta's 2007 Post: A Very Nerdy Christmas (see her post for an explanation of the origins of the Mortgage Pig™)

With the new rules for Fannie and Fredde, maybe it should be "Is that a Pig? No, it's Fannie Mae!"

Click on Pig for larger image in new window.

Happy Holidays to all! CR

by Calculated Risk on 12/25/2009 11:59:00 AM

A few economic posts from this week:

Commentary and housing overview: Residential Investment: Moving Sideways

Treasury Uncaps Fannie and Freddie: TREASURY ISSUES UPDATE ON STATUS OF SUPPORT FOR HOUSING PROGRAMS

From Bloomberg: U.S. Commercial Real Estate Index Falls 1.5%

Existing Home Sales up Sharply in November

New Home Sales Decrease Sharply in November

November PCE and Saving Rate

From the Yosemite Association, a live web cam view of Half Dome in Yosemite. Happy Holidays to all!