According to the MBA data, purchases still cannot get any traction in response to the multi decade low in mortgage rates and the seasonally busy time of the year. Purchases fell 4.2% to the lowest since the week ended Nov 14 which was right before the Fed announced their MBS purchase plan even though mortgage rates have fallen 144 bps since that time from 6.17% to 4.73%. Refi’s on the other hand rose 7.7% and remains near the highest level since ’03 when rates were between 5-5.5%.

The Feb FHFA home price index is out at 10am. ABC confidence rose 4 pts to -47 to a 5 week high and coincides with the recent action in the markets.

The WSJ is reporting that on Friday the Govt will release ‘an outline of how the stress test’s were conducted,’ especially the degree of stress they used in their assumptions. On May 4th, more details will be out on specific banks.

The Yen is quietly at a 3 1/2 week high after Japanese exports were a touch better that estimated.
 

Category: Markets, Trading

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

21 Responses to “Where Are the Buyers?”

  1. aitrader says:

    The Yen may be at a local maximum but the Dollar is rallying against the Pound, Euro, Swiss Franc, and Canadian Loony.

    http://seekingalpha.com/article/132266-how-to-determine-the-end-of-the-current-u-s-dollar-rally

    Gold is still trading in sync with the other metals. Seems its days as a hedge are either over or on an extended vacation.

    And the market is still holding in an 8,000 channel despite the largest earnings drop in 60 years. PE ratios are in the toilet with worse to come.

    Standard and Poor’s is predicting that, for the first time, the S&P 500 will have a negative twelve-month trailing price-to-earnings ratio in the third quarter of 2009.

    http://seekingalpha.com/article/132197-s-p-500-there-is-no-p-e-part-i

    Bizarre. Simply bizarre. Makes one want to throw up one’s hands and gargle a martini or two.

  2. danm says:

    Here in Canada, my brother’s mortgage is now at 1.5% if not less!

    Bank of Canada just announced it is keeping rate at .25% for at least a year. What a joke! We know what happened the lest time that happened in the US.

    Retirees galore around me just can’t take those 2% rates anymore and are jumping into US high yield.

    It’s not even an accident waiting to happen anymore it’s a disaster in themaking.

  3. wunsacon says:

    >> We know what happened the last time that happened in the US.

    danm, what did happen? The dollar plunged making the bet go bad? Or something else?

  4. danm says:

    wunsacon:

    I was talking about the fed keeping the rates at 1% for a long time! Created a bigger bubble.

  5. greg says:

    danm…keeping the rates at 1% for a long time didn’t create the bubble, greed created the bubble. Retired people don’t need big returns. It’s just going to go to their kids anyways. They can always play the market if they want to get more than 2%.

  6. CPJ13 says:

    Barry,

    As an anecdote, my best friend here in Boston is a mortgage broker – one of the few who hasn’t been shut down, sued, or closed up shop – and he’s never been busier trying to close purchase transactions. It’s not about the housing price points, it’s not about the rates – it’s about the guidelines. The ONLY programs available are FNM/FRE or FHA. Not only that, but those aforementioned conduits have tightened up their guidelines and underwriting so dramatically that he just can’t get loans closed.

    It’s not for lack of demand, rates, etc. 90% of people just can’t qualify for mortgages. (employment, credit score, down payment, etc.)

    Much more pain to come if these entities are the only ones providing credit to the housing market for the foreseeable future…

  7. Onlooker from Troy says:

    >>>It’s not for lack of demand, rates, etc. 90% of people just can’t qualify for mortgages. (employment, credit score, down payment, etc.)

    Much more pain to come if these entities are the only ones providing credit to the housing market for the foreseeable future…<<<

    @CPJ13
    So what are you saying? That we should lower lending guidelines and lend more money to people who aren’t credit worthy? That’s insane. It’s what got us here. Isn’t that obvious?

    The debt deflation tsunami can’t be fended off by more ridiculous borrowing/lending. We are going to have to take our medicine. And it won’t be tasty.

  8. greg says:

    CPJ13
    90% of people can’t qualify for a mortgage? That would seem mathematically impossible. 90% of homeless people maybe, or 90% of crack whores maybe, but 90% of all people?

  9. CPJ13 says:

    No, not at all. I’m simply saying that some of the criticism for why housing hasn’t rebounded is misguided (“rates need to be lower and more affordable”, “houses need to come down in price”, etc.).

    The real reason that we’re correcting so sharply – and will continue to for a long time – is that ‘historically normal’ guidelines have been reapplied to the home-buying process. Everyone got so drunk on cheap, free and loose credit that once the spigot is shut off to all but those who ‘should’ be buying houses, it’s a painful process and we’re not nearly through it.

    People now have to think about SAVING for a down payment; they have to consider their overall credit (late on credit cards? collections? etc.). It’s a vicious cycle – a couple missed credit card payments will kick you from acceptance into a FNM/FRE program; if you carry high balances on your CC accounts it may do the same thing.

    Simply stating that it’s going to take a loooong time for housing to recover if we stick to currently guidelines and standards. It’s a good thing – but yes, it will be painful as hell. And long drawn out.

  10. CPJ13 says:

    @ greg:

    90% of applicants.

  11. CPJ13 says:

    He says his company consistently has about 50-60 purchase applications ‘in the pipeline’ on any given month, with 5-6 closing. It’s the lowest ratio he’s seen in the last seven years in the business.

  12. greg says:

    @CPJ13

    SAVING for a downpayment. Bout time. The policy of giving 100% mortgages should never, under any circumstances, have taken place. If you can’t afford a house, you rent. If you want one bad enough, find a way. A lot of people walking away from their mortgages now are doing so because they’ve got no money into it. Why would they stay?

  13. drollere says:

    it costs more to buy today than to buy tomorrow. what’s mysterious?

    and financing criteria have been sharply strengthened. my local bank requires a dna swab, financial records back to 1974, and a federal database search. guess their serious about that creditworthiness thing.

  14. Nice changeup Barry. The new site look is growing on me already. I don’t miss the old one

  15. cttfinder says:

    OFHEO data suggests prices ticked higher my friend.

    See Professor Perry’s post: Did The Housing Market Bottom in Late 2008?

    http://mjperry.blogspot.com/

  16. DeDude says:

    I think CPJ13 has the real answer. A lot of people who are fully capable of paying the loans are simply not able to come up with the downpayment or qualify under the current stringent guidelines. If that is correct then the stimulus bills tax credit for new homowners will fail to do much for the housing market. It also means that lower interest rates and/or lower prices will have minimal effects.

    Even though the previous “standards” were clearly a joke and had to be tightened, the problem is, just as with the banks, that you have to do it slowly to avoid creating havoc. But how can we politically get to a point where F&F can be allowed to be a little more irresponsible and then hand over the bill for such behaviour to Uncle Sam. All this old fart moralizing about “saving” and “responsible behaviour” and “bla. bla. bla” may feel good for those practizing it, but it won’t turn the economy around or help any of us responsible people who see our house values cut in half and our jobs disappear. I don’t give a s**t about moralitiy, I want the economy to turn around so everybody can get the opportunity to practice those values of hard work and savings.

  17. danm says:

    I want the economy to turn around so everybody can get the opportunity to practice those values of hard work and savings.
    ——————
    The faster the economy turns around, the less there will be an incentive to value hard work and savings.

    These values will only come back after some hardship is felt.

  18. FromLori says:

    In the unemployment lines and at Bankruptcy court…

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