Jun. 15, 2007: Mortgage cackling, with a little joke

How can we be halfway through with June already? Or almost halfway through with 2007? Time moves along, unlike time on my parent’s VCR which has been flashing “12:00:00” for the last eight years…

We all know that lenders are becoming more restrictive when issuing residential loans due to declining home prices and rising delinquencies. How much? The Federal Reserve’s most recent Survey of Senior Loan Officers indicates that roughly 16% of respondents tightened credit standards in 2007-Q1, equal to the tightening that took place during the housing market downturn in the early 1990’s. The least restrictive period was (surprise!) 2004 through 2006.

What are rates doing this morning? Not much, in spite of quite a bit of news. Energy prices pushed up the May Consumer Price Index (CPI): it was +.7% m-o-m, or 2.7% y-o-y, while the core CPI (ex-food & energy) was weaker than expected at +.1%, or 2.2% y-o-y. We also had the Empire State Manufacturer’s Index (a measure of manufacturing strength in New York) which jumped from May’s “8” to “25.8”. The 10-yr Treasury note was back up at 5.24% this morning, 5.22% before the number, and now sits at 5.21% – not much different from yesterday. We still have Industrial Production, Capacity Utilization, and the Michigan confidence survey ahead of us.

Bob, a 70-year-old, extremely wealthy widower, shows up at the Country Club with a breathtakingly beautiful and very sexy 25 year- old blonde who knocks everyone’s socks off with her youthful sex appeal and charm. She hangs onto Bob’s arm and listens intently to his every word. His buddies at the club are all aghast. At the very first chance, they corner him and ask, “Bob, how did you get the trophy girlfriend?” Bob replies, “Girlfriend? She’s my wife!”

They’re amazed, but continue to ask. “So, how did you persuade her to marry you?”

“I lied about my age”, Bob replies.

“What, did you tell her you were only 50?”

Bob smiles and says, “No, I told her I was 90.”