September 7, 2009

Weekly Mortgage Market Update; Mortgage Bankers Association

Weekly Mortgage Market Update; Mortgage Bankers Association for the week of August 28, 2009.

Market Composite Index: (loan application volume) decreased 2.2 percent

Refinance Index: Decreased 3.1 percent from the previous week

Government Purchase Index: Rose 0.5 percent from the prior week for its 7th consecutive gain

Refinance Activity: Unchanged this week at 56.5 percent.

ARM Refinance Activity: decreased to 5.6 percent from 6.5 percent of total applications from the previous week.

The delinquency rate on one-to-four-unit residential properties: Rose to a seasonally adjusted rate of 9.24 percent of all loans outstanding as of the end of the second quarter of 2009, up 283 basis points from one year ago,
The rate of new foreclosures: unchanged from last quarter.

MBA outlook: It is unlikely we will see meaningful reductions in the foreclosure and delinquency rates until employment improves. Its no longer a sub prime debacle, its good mortgages going bad because people have lost work. However, MBA sees manufacturing growth, residential investment, and consumer spending turning positive in the third quarter...perhaps confirming that the recession may have ended.

Federal Reserve Activity - Weekly Report

Its become the Feds job to keep the secondary market alive until investors begin to trust the secondary markets and liquidity returns as they trust and buy these mortgage bundles. That will allow the banks to resell their mortgages to investors and use the cash to provide more loans for business and home purchases. Until that happens, there will be less money and more lending restrictions, prolonging the recovery.

Fed Mortgage Backed Securities Purchases Increase for Fifth Consecutive Week as Feds bought upwards of 25 billion dollars of Mortgage Backed Securities. Since inception of the program the Federal Reserve has spent $818 billion of the $1.25 trillion made available for mortgage purchases, effectively making the Govt. the biggest mortgage holder in the land.

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