by Calculated Risk on 10/13/2011 11:28:00 AM

Mortgage rates increased, but are still near 60 year lows.

• From Freddie Mac: Fixed Mortgage Rates Up Sharply Following Jobs Report

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates up sharply from the previous week's record-setting lows following a better than expected employment report. Despite the sharp increase, mortgage rates remain near their 60-year lows.

30-year fixed-rate mortgage (FRM) averaged 4.12 percent with an average 0.8 point for the week ending October 13, 2011, up from last week when it averaged 3.94 percent.

15-year FRM this week averaged 3.37 percent with an average 0.8 point, up from last week when it averaged 3.26 percent. A year ago at this time, the 15-year FRM averaged 3.62 percent.

• From RealtyTrac: Foreclosure Activity on Slow Burn

RealtyTrac® (www.realtytrac.com) ... today released its U.S. Foreclosure Market Report™ for the third quarter of 2011, which shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 610,337 properties in the third quarter, an increase of less than 1 percent from the previous quarter and a decrease of 34 percent from the third quarter of 2010. ...

Foreclosure filings were reported on 214,855 U.S. properties in September, a 6 percent decrease from August and a 38 percent decrease from September 2010. September marked the 12th straight month where foreclosure activity decreased on a year-over-year basis.

“U.S. foreclosure activity has been mired down since October of last year, when the robo-signing controversy sparked a flurry of investigations into lender foreclosure procedures and paperwork,” said James Saccacio, chief executive officer of RealtyTrac. “While foreclosure activity in September and the third quarter continued to register well below levels from a year ago, there is evidence that this temporary downward trend is about to change direction, with foreclosure activity slowly beginning to ramp back up.”

by Calculated Risk on 10/13/2011 09:15:00 AM

The Department of Commerce reports:

[T]otal August exports of $177.6 billion and imports of $223.2 billion resulted in a goods and services deficit of $45.6 billion, virtually unchanged from July, revised. August exports were $0.1 billion less than July exports of $177.7 billion. August imports were $0.1 billion less than
July imports of $223.3 billion.

The trade deficit was slightly below the consensus forecast of $46 billion.

The first graph shows the monthly U.S. exports and imports in dollars through August 2011.

Click on graph for larger image.

Exports and imports were mostly unchanged in August (seasonally adjusted). Exports are well above the pre-recession peak and up 15% compared to August 2010; imports have stalled recently and are up about 11% compared to August 2010.

The second graph shows the U.S. trade deficit, with and without petroleum, through August.

The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

Oil averaged $102.62 per barrel in August, down slightly from $104.27 per barrel in July. The trade deficit with China increased to a record $29 billion; trade with China remains a significant issue.

Imports have been moving sideways for the last several months - partially due to slightly lower oil prices. However the trade deficit with China continues to increase. Exports are still generally trending up.

by Calculated Risk on 10/13/2011 08:38:00 AM

The DOL reports:

In the week ending October 8, the advance figure for seasonally adjusted initial claims was 404,000, a decrease of 1,000 from the previous week's revised figure of 405,000 [revised up from 401,000]. The 4-week moving average was 408,000, a decrease of 7,000 from the previous week's revised average of 415,000.

The following graph shows the 4-week moving average of weekly claims since January 2000 (there is a longer term graph in graph gallery).

Click on graph for larger image in graph gallery.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims declined this week to 408,000.

This is the lowest level for the 4-week average of weekly claims since August, and this was at the consensus forecast. This is still elevated, but the decline in the 4-week average is a positive.

by Calculated Risk on 10/12/2011 11:31:00 PM

From the Irish Times: Up to 10,000 homeowners could enter 'mortgage to rent' scheme

The Inter-Departmental Working Group on Mortgage Arrears, which published its widely anticipated report yesterday, has proposed the introduction of two “mortgage to rent” social housing schemes. These would mean approved housing agencies taking ownership of homes in specific circumstances or the leasing of houses by banks to local authorities, which would in turn rent them to former owners.
...
The report ... stressed that there would be no blanket debt or negative equity forgiveness. Defending the decision not to implement a blanket forgiveness scheme, the report states it would cost some €14 billion to clear negative equity in Irish mortgage portfolios, while tackling those home loans taken out between 2006 and 2008 would cost in the region of €10 billion.

Dean Baker and others have proposed a similar plan for the U.S. (Here is Dean Baker's 2009 proposal). There was some discussion a few months ago about converting some homeowners to renters, but I haven't heard anything about it lately.

The U.S. population is roughly 50 times the size of Ireland, so a similar plan would be for 500 thousand homeowners. A blanket forgiveness more would probably cost $1 trillion or more in the U.S. (won't happen in the U.S. either).

by Calculated Risk on 10/12/2011 08:05:00 PM

A few European stories ... the next key date is Sunday, October 23rd, when European Union leaders will hold a summit meeting.

This is probably the last mention of Slovakia for some time, from the WSJ: Europe's Bailout Fund Overcomes a Hurdle

Slovakia's largest opposition party ... cleared the way Wednesday for the country to endorse changes to the €440 billion ($600 billion) euro-zone bailout fund

From the NY Times: E.U. Tells Banks to Garner Bigger Reserves

Under proposals outlined by the European Commission president, José Manuel Barroso, banks would be required to temporarily bolster their protection against losses ... Mr. Barroso also called on the 17 European Union members that use the euro to maximize the capacity of their 440 billion euro ($600 billion) bailout fund — a clear hint that he favors leveraging the rescue fund to increase its firepower to as much as 2 trillion euros ($2.8 trillion)

From the Financial Times: Insurance plan to boost rescue fund’s reach

European policymakers are moving towards a plan that would enable the eurozone’s €440bn rescue fund to insure investors against some losses on government bonds, arguing it presents the fewest legal and political hurdles to quickly increasing the fund’s firepower.
excerpt with permission

On Thursday, Greek prime minister George Papandreou is is meeting with Herman van Rompuy, president of the European council, and Jean-Claude Juncker, chair of euro finance ministers in Brussels.

The Greek 2 year yield isat 73.5%. The Greek 1 year yield is at 156.4% (a new high).

The Portuguese 2 year yield is at 17.3% and the Irish 2 year yield is at 7.4%.

The Spanish 10 year yield is at 5.1% and the Italian 10 year yield is at 5.7% (the Italian bond yield is moving up).