Aug. 9, 2007: Mortgage update: the changes have slowed!

Aug. 9, 2007: Mortgage update: the changes have slowed! Rob Chrisman

I used to be indecisive. Now I’m not sure.

One industry expert mentioned that, “I should have known that we were near the peak of the housing market and questionable investor guidelines when my Supercuts gal went out and bought a house on her own!”

Good news! The MBA Mortgage Applications Index was +8.1% last week, with purchases +7.4%, and refinances +9.1%.  Critics were quick to point out that it is only a one-week gain and may be due to falling interest rates, that it may not translate into stronger home sales, and that the index is being biased upward by the troubles in the mortgage industry.

RFC made further pricing adjustments to their Pay Option ARM program.

Citi is rumored to be changing their NIVA, NINA, and Expanded 2nds (subprime) programs, along with their SISA non-agency LTV and FICO parameters.

If you’d like a good article on reverse mortgages, check out http://www.sfgate.com/cgi-bin/article.cgi?f/c/a/2007/07/22/BUGPER3RR31.DTL&feedrss.kpender

As everyone knows, turmoil in the U.S. home-mortgage market is starting to pinch even buyers of high-end homes with good credit records. This surge in rates on so-called jumbo loans is particularly notable because rates on 10-year Treasury bonds have been falling. What is going on with jumbo mortgage pricing? Normally, mortgage rates move in tandem with the Treasury market, but market jitters have caused investors to question jumbo-backed mortgage securities (mortgages that exceed the $417k limit for loans eligible for purchase and guarantee by Fannie and Freddie). They account for about 16% of the mortgage market, according to Inside Mortgage Finance. Lenders were charging an average 7.375% for prime 30-year fixed-rate jumbo loans recently, up from an average of about 7.125% last week and 6.5% in mid-May.

In an amazing development, yesterday some of our attention returned to the market! Unfortunately we had a very weak 10-yr Treasury auction which drove prices down and rates higher. The yield on the 10-yr hit 4.87% and its price was down (worse) by almost 1 point, although mortgage prices were only worse by .125 to .250. We have improved this morning, however, after a large bank (or money manager) in Europe suspended withdrawal of funds due to the inability to value its subprime assets. The ECB (European Central Bank) quickly reacted and cut the rate temporarily to 4.0%. The Treasury will continue its refunding program today and sell $9 billion of 30-year bonds.