So, it is great news that the Mortgage Bankers Association is reporting that mortgage delinquencies are at their lowest levels since 1979, no...not 1997....1979!
MBA’s National Delinquency Survey showed that the delinquency rate for mortgage loans on one- to four-unit residential properties fell to a seasonally adjusted rate of 3.77% of all closed loans. The rate was down 20 basis points from Q3 2019 and 29 basis points from Q4 2018. The share of loans in the process of foreclosure in the fourth quarter was only 0.21%.
Marina Walsh, vice president of industry analysis at MBA, said "Mortgage delinquencies track closely to the US unemployment rate, and with unemployment at historic lows, it's no surprise to see so many households paying their mortgage on time,” and that “Signs of healthy conditions were seen in other parts of the survey. The foreclosure inventory rate (the percentage of loans in the foreclosure process) was at its lowest level since 1985. Furthermore, states with lengthier judicial processes continued to chip away at their foreclosure inventories, and it also appears that with home-price appreciation and equity accumulation, distressed borrowers have had alternative options to foreclosure."
What Happened to Rates Last Week?
Mortgage backed securities (FNMA 3.000 MBS) lost -33 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move higher compared to the prior week.
Overview: Rising inflation (CPI up 2.5%, Import Prices up 0.7%), solid Retail Sales and very high Small Business Optimism and Consumer Sentiment combined with some very strong technical resistance levels, pushed long bond prices lower which pushed up mortgage rates.
Retail Sales:The January was basically inline with expectations with the Headline number hitting 0.3% vs est of 0..3%. When strip out Autos, it was also 0.3% vs est of 0.3%.
Genco Olive Oil: The Import/Export business is good with prices rising. Export Prices MOM climbed by 0.7% vs est of a decrease of -0.1%. Import Prices MOM increased by 0.3% but that was a lower than market forecasts of 2.5%.
Production: Industrial Production for January contracted by -0.3% vs est of -0.2%. Capacity Utilization mated expectations with a reading of 76.8%
Consumer Sentiment: The preliminary UofM Consumer Sentiment Index was quite strong at 100.9 vs est of 99.5%.
Inflation Nation: The January Consumer Price Index was a little hotter than expected with the Headline CPI YOY at 2.5% vs est of 2.4% an the Core (ex food and energy) YOY at 2.3% vs est of 2.2%.
Small Business Optimism: The January NFIB Small Business Optimism Index was much higher than expected (104.3 vs est of 103.2) and a nice surge over December's level of 102.7
The Talking Fed: Fed Chair Jerome Powell had two days of testimony with the Committee on Financial Services in the House and the Senate Banking Committee. You can read his prepared testimony here. The statement was basically the same as what he turned in on last Friday so the bond market had no real reaction to the written statement and during his live Q&A, there were no bombshells at all.
What to Watch Out For This Week:
The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.
It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets. Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.