Oct. 15, 2007: Some mortgage numbers to chew on… and oil over $85/barrel & the 10-yr up to 4.71%

Oct. 15, 2007: Some mortgage numbers to chew on… and oil over $85/barrel & the 10-yr up to 4.71% Rob Chrisman

I noticed that the Energizer Bunny was arrested and charged with battery.

Why did the chicken cross the playground?

To get to the other slide.

Speaking of ITIN-related mortgages, it was reported that HNMA suspended their ITIN program on October 3rd. “They had really high rates and no one was willing to buy their loans so they temporarily suspended the program” said one person familiar with the situation, and that “their warehouse lenders would not supply funds for the product, Deutsche Bank was their take out and they’re out of the correspondent business”.

According to their press release, in order to help borrowers “level the playing field with lenders”, a new website and consumer service is working on helping borrowers get information about their mortgage terms, protecting them from choosing unsuitable mortgage loans and preventing them from falling prey to predatory lending practices. The website, http://www.offerangel.com, is the site, in case you have a client mention it. (Thank you Anjali – Pleasanton.)

According to a story in the Wall Street Journal, 130 million home loans were made over the last 10 years, but from 2004 to 2006, when home prices peaked in many parts of the country, originators made a combined $1.5 trillion in “high-interest-rate” loans. Most subprime loans fall into this bucket, and they accounted for 29% of the total number of home loans originated last year, up from 16% in 2004. About 10.3 million high-rate loans were made in the past three years, out of a total of 43.6 million mortgages. High-rate lending jumped by an even larger percentage in 68 metropolitan areas. Almost 90% of subprime mortgages made between 1999 and 2004 were “prepaid” within three years.

Rates crept up Friday, and mortgage prices worsened slightly, as thoughts of another Fed rate cut diminished. Retail Sales were strong, inflation is still an issue (the Producer Price Index data was negative as both the month/month and year/year reports exceeded expectations, and look where oil is today!), although mortgages performed well into the sell-off as lower prices were met with good demand from money managers, hedge funds and Chinese central banks.

What about this week? Besides a large number of quarterly earnings reports from publicly traded companies throughout the week, we have a light day of data ahead of us this morning, with only the Empire Manufacturing report scheduled.  Tomorrow we have September’s Industrial Production report, giving us an indication of manufacturing strength, expected +.1. Wednesday we have September’s Consumer Price Index (CPI), measuring inflationary pressures at the consumer level of the economy. Analysts are expecting to see a rise of 0.2% in the overall index and an increase of 0.2% in the core data reading. A larger than expected increase in the core reading could raise inflation concerns in the bond market and push mortgage rates higher Wednesday. Also due out Wednesday is September’s Housing Starts. The Fed Beige Book will be released Wednesday afternoon, giving us an idea of economic conditions throughout the U.S. by region. It is relied upon heavily by the Federal Reserve during FOMC meetings when determining monetary policy. And then lastly Thursday morning the Conference Board will post September’s Leading Economic Indicators (LEI) at 10:00 AM EST.