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LendingTree http://lt.posterous.com You To The Rescue posterous.com LtPosteroushttp://feedburner.google.com Tue, 09 Nov 2010 15:22:00 -0800 LendingTree Chief Economist Cameron Findlay's blog posts now at the LendingTree blog http://feedproxy.google.com/~r/LtPosterous/~3/dDhF9sKLbQI/lendingtree-chief-economist-cameron-findlays http://lt.posterous.com/lendingtree-chief-economist-cameron-findlays <p> <p>Thank you for visiting!</p> <p>LendingTree Chief Economist Cameron Findlay is no longer posting his updates on this Posterous site.</p> <p>But that doesn't mean he has stopped blogging. Not a chance. You can still keep up with his insightful perspectives on the economy, housing and loan industries at the LendingTree blog. Just look for him under the Market News category:</p> <p> <a href="http://blog.lendingtree.com/blog/category/market-news/">http://blog.lendingtree.com/blog/category/market-news/</a></p> <p>We invite you to continue following him there, and to post your own comments and thoughts. And while you are there, check out the rest of our content offerings on the LendingTree blog.</p> <p>Anna Cearley</p> <p>Social Media Director, Tree.com</p> <p> </p> <p> </p> </p> <p><a href="http://lt.posterous.com/lendingtree-chief-economist-cameron-findlays">Permalink</a> | <a href="http://lt.posterous.com/lendingtree-chief-economist-cameron-findlays#comment">Leave a comment  »</a> </p><img src="http://feeds.feedburner.com/~r/LtPosterous/~4/dDhF9sKLbQI" height="1" width="1"/> http://files.posterous.com/user_profile_pics/478824/twitter-icon_bigger_thumb.jpg http://posterous.com/users/5erz5lfeX4K5 Tree Social Media Tree Tree Social Media http://lt.posterous.com/lendingtree-chief-economist-cameron-findlays Wed, 08 Sep 2010 20:31:00 -0700 Housing affordability trends up and mortgage rates low http://feedproxy.google.com/~r/LtPosterous/~3/Flemx9dmPbQ/housing-affordability-trends-up-and-mortgage http://lt.posterous.com/housing-affordability-trends-up-and-mortgage <p> <p><span style="color: #548dd4;"><span style="font-family: Arial;"><span style="font-size: 11pt;"><strong>Sept. 8, 2010<br /> </strong></span></span></span><span style="font-family: Arial; font-size: medium;">Min Kim within the Capital Markets Risk Group at LendingTree Loans prepared the following report for your review on Housing Affordability. <span style="font-size: 13px;"><span style="font-family: Arial;"><span style="font-size: 12pt;">For your reference, the HOI <span style="color: #808080;">[Housing Opportunity Index]</span> calculates the percentage of households that can afford a median priced home. </span></span><span style="font-size: 12pt;"><span style="font-family: Arial;">The NAHB <span style="color: #808080;">[National Association of Home Builders]</span> assumes household affordability is a monthly mortgage that is no more than 28 percent of <span style="text-decoration: underline;">household</span> monthly gross income.</span></span></span></span></p> <p><span style="font-size: 12pt;"><span style="font-family: Arial;"><div class='p_embed p_image_embed'> <a href="http://posterous.com/getfile/files.posterous.com/temp-2010-09-08/cjJAHJHvIwvqmudEbfDFmkdEyjHGvIkGuacABzvfDGgyEIsiCdBdfaimrxkn/Housing_Affordability_Findlay.png.scaled1000.png"><img alt="Housing_affordability_findlay" height="318" src="http://posterous.com/getfile/files.posterous.com/temp-2010-09-08/cjJAHJHvIwvqmudEbfDFmkdEyjHGvIkGuacABzvfDGgyEIsiCdBdfaimrxkn/Housing_Affordability_Findlay.png.scaled500.png" width="500" /></a> </div> <span style="font-size: 12pt;"><span style="font-family: Arial;">The HOI/Median Home Price graph exhibits a rough inverse relationship between affordability and home prices.<br /> </span></span><span style="font-family: Calibri, Verdana, Helvetica, Arial;"><span style="font-size: 11pt;"><br /> <ul> <li><span style="font-family: Arial, Helvetica, sans-serif; font-size: 16px;">As home prices increase, fewer households can afford traditional mortgage payments.  Households were able to secure “unaffordable” mortgages due to the availability of exotic loans that required little or no income verification and flexible interest/principal payment options.</span></li> </ul> <ul> <li><span style="font-family: Arial, Helvetica, sans-serif; font-size: 16px;">These factors drove affordability downward. The lowest national affordability occurred on 2006 Q3 with only 40% of households being able to afford a median priced home. </span></li> </ul> <ul> <li><span style="font-family: Arial, Helvetica, sans-serif; font-size: 16px;"><span style="font-family: Symbol;"><span style="font-size: 12pt;"> </span></span><span style="font-size: 12pt;"><span style="font-family: Arial;"><span style="text-decoration: underline;">Current</span> affordability is near an all time high with <strong>72.3% of households being able to afford a median priced home</strong>. Affordability increased due largely to lower home prices (currently at 2004 levels) and low mortgage rates .</span></span></span></li> </ul> </span></span></span></span></p> <p><span style="font-size: 12pt;"><span style="font-family: Arial;"><span style="font-size: 12pt;"><span style="font-family: Arial;"><div class='p_embed p_image_embed'> <a href="http://posterous.com/getfile/files.posterous.com/temp-2010-09-08/HHFrrCFfphEoxEwIpwofqrstnDwfakpBDotyxgevGHCmiqbenwrAlBBcnqvt/Housing_Affordability_Mortgage_Rates.png.scaled1000.png"><img alt="Housing_affordability_mortgage_rates" height="318" src="http://posterous.com/getfile/files.posterous.com/temp-2010-09-08/HHFrrCFfphEoxEwIpwofqrstnDwfakpBDotyxgevGHCmiqbenwrAlBBcnqvt/Housing_Affordability_Mortgage_Rates.png.scaled500.png" width="500" /></a> </div> <span style="font-family: Symbol;"><span style="font-size: 12pt;">   </span></span><span style="font-size: 12pt;"><span style="font-family: Arial;">The inverse relationship between affordability and mortgage rates is obvious with the exception of the period of exotic mortgages (between 2003 and 2008). As mortgage rates decrease, higher priced homes become more affordable based on monthly mortgage payments. For example, if</span></span><span style="font-size: 12pt;"><span style="font-family: Arial;"> a household can afford a $1,500 monthly mortgage payment, with an 8% mortgage rate they can only qualify for a $204,000 loan. At a 5% mortgage rate, that same household can qualify for a $279,000 loan.<br /> </span></span><span style="font-family: Calibri, Verdana, Helvetica, Arial;"><span style="font-size: 11pt;"><br /> <ul> <li><span style="font-family: Arial, Helvetica, sans-serif; font-size: 16px;">Affordability increases as mortgage rates come down because a household can qualify for higher priced homes </span></li> </ul> </span></span><span style="font-family: Calibri, Verdana, Helvetica, Arial;"><span style="font-size: 11pt;"><br /></span></span><span style="font-family: Arial;"><span style="font-size: 12pt;">In short, we remain in an exceptionally low rate environment but will continue to be challenged by an unemployment rate that may breach 10% this year. Even the threat of the loss of 770,000 jobs (from 9.6% to 10.0%) is staggering and will clearly threaten spending. For families looking to move out of the cycle of renting, now may be an opportune time.</span></span></span></span></span></span></p> <p><span style="font-size: 12pt;"><span style="font-family: Arial;"><span style="font-size: 12pt;"><span style="font-family: Arial;"><span style="font-family: Arial;"><span style="font-size: 12pt;"> - By LendingTree Chief Economist Cameron Findlay</span></span></span></span></span></span></p> <p><span style="font-size: 12pt;"><span style="font-family: Arial;"><span style="font-size: 12pt;"><span style="font-family: Arial;"><span style="font-family: Arial;"><span style="font-size: 12pt;">(viewpoints expressed in this blog are that of the author, and do not necessarily reflect that of LendingTree)</span></span></span></span></span></span></p> </p> <p><a href="http://lt.posterous.com/housing-affordability-trends-up-and-mortgage">Permalink</a> | <a href="http://lt.posterous.com/housing-affordability-trends-up-and-mortgage#comment">Leave a comment  »</a> </p><img src="http://feeds.feedburner.com/~r/LtPosterous/~4/Flemx9dmPbQ" height="1" width="1"/> http://files.posterous.com/user_profile_pics/478824/twitter-icon_bigger_thumb.jpg http://posterous.com/users/5erz5lfeX4K5 Tree Social Media Tree Tree Social Media http://lt.posterous.com/housing-affordability-trends-up-and-mortgage Tue, 07 Sep 2010 15:00:00 -0700 Chief Economist Cameron Findlay on the new Consumer Finance Protection Bureau http://feedproxy.google.com/~r/LtPosterous/~3/wKybUGLunoE/chief-economist-cameron-findlay-on-the-new-co http://lt.posterous.com/chief-economist-cameron-findlay-on-the-new-co <p> <p><span style="color: #548dd4;"><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><strong>Sept. 7, 2010</strong></span></span></span></p> <p><span style="color: #548dd4;"><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><strong><br /> </strong></span></span></span><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;">The Dodd / Frank Act created a new agency called the Consumer Finance Protection Bureau [CFPB] and the first of a few deadlines is fast approaching on <strong>Sept 19th</strong>. This is the last day the Secretary of the Treasury has to define the “designated transfer date” which will be sometime between Jan. 17, 2011 and July 21, 2011. The date that is chosen will be an important one since it establishes the timeline the new CFPB will take over rule-making, supervisory authority and enforcement from the Federal Reserve.<p />   <span style="color: #548dd4;"><strong>Borrower Alert<br /> </strong></span>The rules enacted by the CFPB will ensure consumers have access to fair, transparent and competitive markets. Borrowers looking to refinance before the date of transfer will want to pay close attention to market rates and expect a larger than normal amount of rate volatility as the investment community struggles with interpretation around basic concepts like “Qualified Mortgage” which is still to be defined by the CFPB. If you are considering refinance we have free tools available that allow you to do a “mortgage checkup <<span style="color: #0000ff;"><span style="text-decoration: underline;"><a href="http://www.lendingtree.com/mortgage-loans/loan-coach/checkup/">http://www.lendingtree.com/mortgage-loans/loan-coach/checkup/</a></span></span>> ” that take 3 minutes or less to complete, it’s an easy method of evaluating current rates against what you have today.</span><span style="font-size: xx-small;"><span style="font-size: 9pt;"><span style="color: #a6a6a6;"><span style="text-decoration: underline;"><br /></span> </span></span></span><span style="font-size: 11pt;"> <br /> <span style="color: #548dd4;"><strong>Dodd/Frank Act<br /> </strong></span>The Act basically created two views on protection:<br /> <ul> <li>Consumer</li> <li>Prudential (Safety and Soundness)</li> </ul> </span></span><span style="font-size: 11pt;"><span style="font-family: Arial Narrow;">By stripping out the consumer protections and assigning them to one agency, the Federal Reserve (an independent agency) created the CFPB as an independent agency within an independent agency. So while the various government arms such as the Office of Thrift Supervision, Office of the Comptroller, Federal Reserve Board, Federal Deposit Insurance Corporation, National Credit Union and Federal Trade Commission all have the “prudential” interests in mind, the new CFPB will be focused on you -  the consumer. Today, <span style="text-decoration: underline;">enforcement </span>of the rules / laws are by the regulators listed – your mortgage broker is governed by the Federal Trade Commission and your banking institution by one of the others depending on their charter. Once the CFPB takes control and the “transfer” occurs, everyone (except for some small depository institutions) will be under the guidelines established by the CFPB.<p />   The new rules take time and understanding, so let us help. If you have questions, contact one of our <span style="text-decoration: underline;">Licensed</span> Loan Officers 1-800-555-TREE  and start the process of getting answers to understand your options.<br />  </span></span> </p> </p> <p><a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-the-new-co">Permalink</a> | <a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-the-new-co#comment">Leave a comment  »</a> </p><img src="http://feeds.feedburner.com/~r/LtPosterous/~4/wKybUGLunoE" height="1" width="1"/> http://files.posterous.com/user_profile_pics/478824/twitter-icon_bigger_thumb.jpg http://posterous.com/users/5erz5lfeX4K5 Tree Social Media Tree Tree Social Media http://lt.posterous.com/chief-economist-cameron-findlay-on-the-new-co Fri, 03 Sep 2010 09:51:00 -0700 Chief Economist Cameron Findlay on today's jobs report http://feedproxy.google.com/~r/LtPosterous/~3/R5nDeNCrFAU/chief-economist-cameron-findlay-on-todays-job http://lt.posterous.com/chief-economist-cameron-findlay-on-todays-job <p> <p><span style="color: #548dd4;"><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><strong>Sept. 3, 2010</strong></span></span></span></p> <p><span style="color: #548dd4;"><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><strong><br /> </strong></span></span></span><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;">Today’s release of unemployment data from the Labor Department  showed companies added only 67,000 private payrolls jobs (that excludes government agencies). Overall total employment was a net negative as the economy shrank by 54,000 jobs, resulting in an unemployment rate of 9.6%  - which was in line with expectations. The results (although bad) were not as bad as what was expected. The “expectation” of these numbers, usually released on the first Friday of each month, is critical given how the market reacted to this morning’s news with the bond market selling off (meaning yields are going higher). <p />   <span style="color: #548dd4;"><strong>Borrower Perspective<br /> </strong></span>For borrowers, this will translate into higher rates since confidence in the economy is showing at least some signs of resistance (I almost wrote strength)  – and to think it was only last Wednesday (just over a week ago, with the release of the Existing Homes sales data) when the media was discussing the potential for a “double dip” as very real. As the federal government considers its next move - such as the idea of a payroll tax relief to encourage spending and encourage new hires -  most state and local governments also face budget cutbacks given reduction in tax receipts caused by home prices declines and delinquency rates, which still break every record we have. This will only compound unemployment results and make the recovery slower and more painful.<p />   From the graph below you can see the under-employed or gross unemployment (those who want a full time job) remains at approximately 16.7%, which is the same level we had a year ago. At 9.6% we are only 0.5% away from the 26-year high we reached back in Oct’09 of 10.1%</span></span></p> <p><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><div class='p_embed p_image_embed'> <a href="http://posterous.com/getfile/files.posterous.com/temp-2010-09-03/sxcFkbtDzwgfdHoeIytdqGotgjaxjjEjoBiCrjGFFJHuJxsntfwfdimEikHm/Cameron_Findlay_JobsReport.jpg.scaled1000.jpg"><img alt="Cameron_findlay_jobsreport" height="471" src="http://posterous.com/getfile/files.posterous.com/temp-2010-09-03/sxcFkbtDzwgfdHoeIytdqGotgjaxjjEjoBiCrjGFFJHuJxsntfwfdimEikHm/Cameron_Findlay_JobsReport.jpg.scaled500.jpg" width="500" /></a> </div> <em>Disclaimer: Views expressed in these blog posts represent that of the author, and not necessarily that of LendingTree</em></span></span></p> </p> <p><a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-todays-job">Permalink</a> | <a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-todays-job#comment">Leave a comment  »</a> </p><img src="http://feeds.feedburner.com/~r/LtPosterous/~4/R5nDeNCrFAU" height="1" width="1"/> http://files.posterous.com/user_profile_pics/478824/twitter-icon_bigger_thumb.jpg http://posterous.com/users/5erz5lfeX4K5 Tree Social Media Tree Tree Social Media http://lt.posterous.com/chief-economist-cameron-findlay-on-todays-job Thu, 02 Sep 2010 16:54:00 -0700 Chief Economist Cameron Findlay on Pending Home Sales Results http://feedproxy.google.com/~r/LtPosterous/~3/k4thuS6h2d0/chief-economist-cameron-findlay-on-pending-ho http://lt.posterous.com/chief-economist-cameron-findlay-on-pending-ho <p> <p><span style="color: #548dd4;"><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><strong>Sept. 2, 2010</strong></span></span></span></p> <p><span style="color: #548dd4;"><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><strong><br /> </strong></span></span></span><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;">The National Association  of Realtors released Pending Home Sales results today (these are a prelude to the “Existing Homes Sales” results which the market reacted adversely to last week). From the below graph you can see the erratic nature of the results skewed by the expiration of the tax credit -  and the surprising boost they showed in <strong><span style="text-decoration: underline;">July of +5.2%</span></strong> That suggests the double dip being discussed in the news is not so close after all. It’s not great news, but clearly it’s not bad -  being lead by the West Coast purchase contracts that rose +11.6% month over month.<p />   For perspective, I’ve placed the results on a historical table below. You can see why the July result was positive (mainly because the June result was so negative). Between April and June mortgage rates to borrowers have declined from approximately 5.25% to their current levels of approximately 4.30%, on a $200k loan  -  that’s $114/month in savings. Despite this decline, purchase contracts  (pending home sales) have not increased substantially and inventories have continued to expand. In fact, existing home sales inventory at 12.5 months was the highest levels in more than 27years.<p />   <span style="color: #548dd4;"><strong>Impact<br /> </strong></span>The market did not move significantly one way or another today, with only a slight increase in mortgage rates. Most of the change was due to advance trading given expected light volume in trading on Friday (in advance of the Monday holiday) and prior to the Non Farm Payrolls data also due out tomorrow. Unemployment Rate is expected to grow to 9.6% from 9.5% (to be released at 8:30am EST).</span></span></p> <p><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><div class='p_embed p_image_embed'> <a href="http://posterous.com/getfile/files.posterous.com/temp-2010-09-02/EhyvlqsAspoAIaDzGEfislHHxAujxepisHcbCJkuFJjyfEbeaqycrdGGEjFr/pending_home_sales.jpg.scaled1000.jpg"><img alt="Pending_home_sales" height="367" src="http://posterous.com/getfile/files.posterous.com/temp-2010-09-02/EhyvlqsAspoAIaDzGEfislHHxAujxepisHcbCJkuFJjyfEbeaqycrdGGEjFr/pending_home_sales.jpg.scaled500.jpg" width="500" /></a> </div> (Disclosure: The views here are that of my own, and not necessarily that of my employer LendingTree)</span></span></p> </p> <p><a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-pending-ho">Permalink</a> | <a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-pending-ho#comment">Leave a comment  »</a> </p><img src="http://feeds.feedburner.com/~r/LtPosterous/~4/k4thuS6h2d0" height="1" width="1"/> http://files.posterous.com/user_profile_pics/478824/twitter-icon_bigger_thumb.jpg http://posterous.com/users/5erz5lfeX4K5 Tree Social Media Tree Tree Social Media http://lt.posterous.com/chief-economist-cameron-findlay-on-pending-ho Tue, 31 Aug 2010 11:38:00 -0700 Chief Economist Cameron Findlay Taking a Poll: Vote Now for Your Housing Solution! http://feedproxy.google.com/~r/LtPosterous/~3/JaLR6Wrte_c/chief-economist-cameron-findlay-taking-a-poll http://lt.posterous.com/chief-economist-cameron-findlay-taking-a-poll <p> <p><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><span style="color: #548dd4; font-weight: bold;">Aug. 31, 2010</span></span></span></p> <p><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><span style="color: #548dd4; font-weight: bold;"> </span>This morning LendingTree participated in the <a href="http://www.cnbc.com/id/15840232?video=1579110618&play=1">ongoing housing debate</a> on CNBC to discuss the concept of just letting housing freefall <span style="text-decoration: underline;">or</span> to continue to provide government assistance and prolong the slow decline we have seen. It’s a contentious debate and I’d like your opinion.<br /> </span></span></p> <p><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;">Please write back to me and “vote” your preference:</span></span></p> <p><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><br /> </span></span><span style="font-size: 11pt;"><span style="color: #808080;"><span style="font-family: Symbol;">·        </span><span style="font-family: Arial Narrow;"><strong>NO – Do not provide government support and let home prices fall to whatever level they may go to<br /> </strong></span></span><span style="font-family: Calibri, Verdana, Helvetica, Arial;"><br /> </span><span style="color: #808080;"><span style="font-family: Symbol;">·        </span><span style="font-family: Arial Narrow;"><strong>YES – Continue to allow government intervention in the mortgage market to artificially sustain home prices<br /> </strong></span></span><span style="font-family: Calibri, Verdana, Helvetica, Arial;"><br /> </span><span style="font-family: Arial Narrow;"><br /> My view is there is probably a balanced approach, somewhere in the middle, but if you have an opinion I’d like to hear about it. We will be publishing results of our survey next week.</span></span></p> <p><span style="font-size: 11pt;"><span style="font-family: Calibri, Verdana, Helvetica, Arial;">You can watch the CNBC video interview here:  <span style="color: #0000ff;"><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><span style="text-decoration: underline;"><a href="http://www.cnbc.com/id/15840232?video=1579110618&play=1">http://www.cnbc.com/id/15840232?video=1579110618&play=1</a></span></span></span></span>  <br /> </span><span style="font-family: Arial Narrow;">********<br /> Below we show the Case-Shiller results on home prices. The graph shows clearly that we have experienced home price improvement, BUT these are June results so you can expect the July release to be less positive. Despite this less-than-positive future perspective we have seen some substantial and sustained improvement: I point to California and Minnesota prices as an example over the past year, with both reflecting increases greater than 10%.</span></span></p> <p><span style="font-size: 11pt;"><span style="font-family: Arial Narrow;">(Disclaimer: The views in these posts are that of my own and not necessarily that of my employer, LendingTree)<br /></span></span></p> <p><div class='p_embed p_image_embed'> <a href="http://posterous.com/getfile/files.posterous.com/temp-2010-08-31/lfHAsHvfgzAvBdoofkFbncDcsIrtcewoFkdldgrvCyekHvykdxtJymactJeu/Case_Shiller_LendingTree.jpg.scaled1000.jpg"><img alt="Case_shiller_lendingtree" height="674" src="http://posterous.com/getfile/files.posterous.com/temp-2010-08-31/lfHAsHvfgzAvBdoofkFbncDcsIrtcewoFkdldgrvCyekHvykdxtJymactJeu/Case_Shiller_LendingTree.jpg.scaled500.jpg" width="500" /></a> </div> </p> </p> <p><a href="http://lt.posterous.com/chief-economist-cameron-findlay-taking-a-poll">Permalink</a> | <a href="http://lt.posterous.com/chief-economist-cameron-findlay-taking-a-poll#comment">Leave a comment  »</a> </p><img src="http://feeds.feedburner.com/~r/LtPosterous/~4/JaLR6Wrte_c" height="1" width="1"/> http://files.posterous.com/user_profile_pics/478824/twitter-icon_bigger_thumb.jpg http://posterous.com/users/5erz5lfeX4K5 Tree Social Media Tree Tree Social Media http://lt.posterous.com/chief-economist-cameron-findlay-taking-a-poll Fri, 27 Aug 2010 08:54:00 -0700 Chief Economist Cameron Findlay on GDP & Bernanke - and what that means for homes http://feedproxy.google.com/~r/LtPosterous/~3/UN5C41xpJKA/chief-economist-cameron-findlay-on-gdp-bernan http://lt.posterous.com/chief-economist-cameron-findlay-on-gdp-bernan <p> <p><span style="color: #808080;"><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;">*RATE ALERT – 10yr Treasury higher in yield by 0.13% (8:30am PST)*<p /> </span></span></span><span style="font-size: 11pt;"><span style="font-family: Calibri, Verdana, Helvetica, Arial;"> </span><span style="color: #548dd4;"><span style="font-family: Arial Narrow;"><strong>Aug. 29, 2010</strong></span></span></span></p> <p><span style="font-size: 11pt;"><span style="color: #548dd4;"><span style="font-family: Arial Narrow;"><strong><br /> </strong></span></span><span style="font-family: Arial Narrow;">The Bureau of  Economic Analysis released a few key numbers this morning that measure the strength of the economy. I have actually got some a positive spin on all this bad news and to make it simple we include some graphs below to help discuss why. First, the release:</span></span></p> <p><span style="font-size: 11pt;"><span style="font-family: Arial Narrow;"> <ul> <li>Economic growth as measured by GDP (gross domestic product) in the 2nd Quarter was +1.6% (2.4% was the estimate just last month to give you an idea of how quickly things have deteriorated). The slowdown was attributed to a decline in housing and investment in business, suggesting spending by consumers will follow suit.</li> </ul> </span><span style="font-family: Calibri, Verdana, Helvetica, Arial;"> <ul> <li><span style="font-family: Arial Narrow, Helvetica, sans-serif;"><strong>It’s important to note today’s GDP release is the second ESTIMATE for the 2nd Qtr with FINAL numbers due on Sept 30th</strong>.</span></li> </ul> </span><span style="font-family: Calibri, Verdana, Helvetica, Arial;"> <ul> <li><span style="font-family: Arial Narrow, Helvetica, sans-serif;">Consumer spending as measured via personal consumption for 2nd Quarter ( This represents approximately 70% of the economy) was revised from the prior estimate of 1.6% to 2.0% annual rate  - but it is expected that the increase was driven by natural gas usage and electricity.</span></li> </ul> </span><span style="font-family: Arial Narrow;"><span style="color: #548dd4;"><strong>Now let's take all the guess work out of what GDP numbers mean and provide a quick perspective.</strong></span></span></span></p> <p><span style="font-size: 11pt;"><span style="font-family: Arial Narrow;"><span style="color: #548dd4;"><strong><br /> </strong></span>1) The bond market sell off  (<span style="text-decoration: underline;">prices down, yields higher…10yr Treasury is 0.13% higher this morning alone</span>) had less to do with the GDP release and more to do with Bernanke’s comments in Wyoming where he stated the central bank will provide additional stimulus as needed - but did not go so far as to say that will be anytime soon. That basically took a second round of Quantitative Easing off the table. He also re-iterated growth in 2011 appears on target. That's great news for your home’s value and not-so-great news for mortgage rates (they drifted higher already by 0.05% this morning).</span></span></p> <p><span style="font-size: 11pt;"><span style="font-family: Arial Narrow;"><br /> 2) In the graphs below we use the “GDP deflator” as a better measure. I show both “CPI ” and “GDP Deflator” both year-over-year. Notice how the GDP deflator is a more smooth indicator of what’s happening. With all the changes (one month higher -  the next month lower), the deflator is my suggested gauge for measuring the risk to inflation. This will be the key to what happens to rates and your home’s value.</span></span></p> <p><span style="font-size: 11pt;"><span style="font-family: Arial Narrow;"><br /> 3) The results from today  - in summary - indicate “Don’t worry about inflation yet,” meaning we won’t be seeing home price increases, and rates should remain relatively low.</span></span></p> <p><span style="font-size: 11pt;"><span style="font-family: Arial Narrow;"><div class='p_embed p_image_embed'> <a href="http://posterous.com/getfile/files.posterous.com/temp-2010-08-27/jzbcamiFupkGzJuebnmvdratDowfxdzitgsBsHxkbHJJkJgBctogBEauafIs/CameronFindlayGDP.jpg.scaled1000.jpg"><img alt="Cameronfindlaygdp" height="278" src="http://posterous.com/getfile/files.posterous.com/temp-2010-08-27/jzbcamiFupkGzJuebnmvdratDowfxdzitgsBsHxkbHJJkJgBctogBEauafIs/CameronFindlayGDP.jpg.scaled500.jpg" width="500" /></a> </div> <br /></span></span></p> </p> <p><a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-gdp-bernan">Permalink</a> | <a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-gdp-bernan#comment">Leave a comment  »</a> </p><img src="http://feeds.feedburner.com/~r/LtPosterous/~4/UN5C41xpJKA" height="1" width="1"/> http://files.posterous.com/user_profile_pics/478824/twitter-icon_bigger_thumb.jpg http://posterous.com/users/5erz5lfeX4K5 Tree Social Media Tree Tree Social Media http://lt.posterous.com/chief-economist-cameron-findlay-on-gdp-bernan Wed, 25 Aug 2010 10:23:00 -0700 Chief Economist Cameron Findlay in a CNBC interview about the housing market http://feedproxy.google.com/~r/LtPosterous/~3/njWRjtZyWtU/chief-economist-cameron-findlay-in-a-cnbc-int http://lt.posterous.com/chief-economist-cameron-findlay-in-a-cnbc-int <p> <p><span style="color: #538cd3;"><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><strong>Aug. 25,  2010<br /> </strong></span></span></span><span style="font-size: 11pt;"><span style="font-family: Calibri, Verdana, Helvetica, Arial;"><br /> </span><span style="font-family: Arial Narrow;">This morning we had an opportunity to appear on CNBC to discuss the housing market and influences impacting borrowers.  We discussed three main elements during the interview which aired live on “Squawk on the Street” at 7:05 am Pacific Standard Time.<br /> </span><span style="font-family: Calibri, Verdana, Helvetica, Arial;"><br /> </span><span style="font-family: Symbol;">·        </span><span style="font-family: Arial Narrow;">The disconnect between Banks and Non Banks in terms of licensing demands<br /> </span><span style="font-family: Calibri, Verdana, Helvetica, Arial;"><br /> </span><span style="font-family: Symbol;">·        </span><span style="font-family: Arial Narrow;">Home Prices<br /> </span><span style="font-family: Calibri, Verdana, Helvetica, Arial;"><br /> </span><span style="font-family: Symbol;">·        </span><span style="font-family: Arial Narrow;">Mortgage Rates<br /> </span><span style="font-family: Calibri, Verdana, Helvetica, Arial;"><br /> </span><span style="font-family: Arial Narrow;">On the mortgage rate topic we didn’t make the argument as clear as I would have liked, but below I provide some guidance as to why many market participants don’t’ fully grasp how disconnected government efforts and mortgage rates are...traditionally, they have always been aligned.<p />   With concern over deflation, rates have ticked LOWER…but not at the same pace as mortgage rates. So while we have seen a decline in the rate to borrowers, those rates could actually afford to be lower…much lower. That means rates today (relative to the treasury market) are actually too high, but I do not expect them to fall.</span></span></p> <p><span style="font-size: 11pt;"><span style="font-family: Arial Narrow;">You can watch the video from the CNBC interview here: <a href="http://www.cnbc.com/id/15840232?video=1574377500&play=1">http://www.cnbc.com/id/15840232?video=1574377500&play=1</a><p />   Below, I offer a brief discussion document on this topic and some evidence of the disconnect. </span></span></p> <p><span style="font-size: 11pt;"><span style="font-family: Arial Narrow;"><div class='p_embed p_image_embed'> <a href="http://posterous.com/getfile/files.posterous.com/temp-2010-08-25/tvFAvoBtwrAiEhJcCxICEuptJbxigegwoeEbhuBlBEzFktmanDioipoodnHa/borrower_rates_flattening_out.jpg.scaled1000.jpg"><img alt="Borrower_rates_flattening_out" height="377" src="http://posterous.com/getfile/files.posterous.com/temp-2010-08-25/tvFAvoBtwrAiEhJcCxICEuptJbxigegwoeEbhuBlBEzFktmanDioipoodnHa/borrower_rates_flattening_out.jpg.scaled500.jpg" width="500" /></a> </div> <br /></span></span></p> </p> <p><a href="http://lt.posterous.com/chief-economist-cameron-findlay-in-a-cnbc-int">Permalink</a> | <a href="http://lt.posterous.com/chief-economist-cameron-findlay-in-a-cnbc-int#comment">Leave a comment  »</a> </p><img src="http://feeds.feedburner.com/~r/LtPosterous/~4/njWRjtZyWtU" height="1" width="1"/> http://files.posterous.com/user_profile_pics/478824/twitter-icon_bigger_thumb.jpg http://posterous.com/users/5erz5lfeX4K5 Tree Social Media Tree Tree Social Media http://lt.posterous.com/chief-economist-cameron-findlay-in-a-cnbc-int Tue, 24 Aug 2010 10:27:00 -0700 Chief Economist Cameron Findlay on today's home sales figures http://feedproxy.google.com/~r/LtPosterous/~3/yI4CBrhukTo/chief-economist-cameron-findlay-on-todays-hom http://lt.posterous.com/chief-economist-cameron-findlay-on-todays-hom <p> <p><span style="color: #548dd4;"><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><strong>Aug. 24, 2010</strong></span></span></span></p> <p><span style="color: #548dd4;"><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><strong><span style="color: #000000; font-weight: normal;">The just-released Existing Home Sales figures from The National Association of Realtors indicate <strong>we experienced a 27.2% decline month over month for July to 3.83 million units annually</strong>. These results are the worst figures released by this index in more than 15 years as inventories have swollen to 12.5 months of supply (a whopping 40% increase from the previous month's results). </span></strong></span></span></span></p> <p><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;">This didn't come as too much of a surprise, based on pending home sales data and other items we saw last week. It was anticipated that the results would be negative - and we may have some volatility in the market resulting from this and other data being released. However, in general, the market was prepared for bad news.<p />   <span style="color: #548dd4;"><strong>Impact<br /> </strong></span>The impact from these weaker-than-expected results will help borrowers in the form of rates (10-year Treasuries rallied and yields have declined since the results were release by 0.09%) BUT today I’d argue further rate declines won’t create further refinance opportunities as much as the opportunity that would be created from some moderate home price appreciation. Borrowers who do not qualify given loan-to-value constraints are being held back by homes that have depreciated, not by rate. The results today will place additional pressure on home prices to decline further  - exacerbating the issue.<p />   It’s not all bad news, as you can see from the below table. Prices in the Northeast and West both increased month-over-month by 4.3% and 2.0% respectively, and both regions also show year-over-year improvement.  <p />   Stay tuned...new home sales will be released tomorrow (8/25)</span></span></p> <p><span style="font-family: Arial Narrow, Helvetica, sans-serif; font-size: medium;"><span style="font-size: 15px;"><span style="font-family: Arial, Helvetica, sans-serif; font-size: small;"><span style="font-size: 13px;"><div class='p_embed p_file_embed'> <a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-todays-hom"><img alt="" src="http://posterous.com/images/filetypes/doc.png" /></a> <div class='p_embed_description'> <strong>lendingstandards.docx</strong> <a href="http://posterous.com/getfile/files.posterous.com/temp-2010-08-24/DmauEznauvdeesxnFFJewncfGvAusFcpwoepEctoJqCmaJhwFtcwwshkiAes/lendingstandards.docx">Download this file</a> </div> </div> <br /></span></span></span></span></p> </p> <p><a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-todays-hom">Permalink</a> | <a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-todays-hom#comment">Leave a comment  »</a> </p><img src="http://feeds.feedburner.com/~r/LtPosterous/~4/yI4CBrhukTo" height="1" width="1"/> http://files.posterous.com/user_profile_pics/478824/twitter-icon_bigger_thumb.jpg http://posterous.com/users/5erz5lfeX4K5 Tree Social Media Tree Tree Social Media http://lt.posterous.com/chief-economist-cameron-findlay-on-todays-hom Fri, 20 Aug 2010 13:40:00 -0700 Chief Economist Cameron Findlay on recent refinancing activity http://feedproxy.google.com/~r/LtPosterous/~3/kJlc4Rjn-_s/chief-economist-cameron-findlay-on-recent-ref http://lt.posterous.com/chief-economist-cameron-findlay-on-recent-ref <p> <p><span style="font-family: Arial Narrow, Helvetica, sans-serif; font-size: 15px; color: #548dd4; font-weight: bold;">Aug. 20, 2010</span></p> <p><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;">Borrower applications to refinance an existing mortgage are produced weekly by the Mortgage Bankers Association. The graph below shows the impact low rates have had on the number of applications to refinance a home, and it also shows the significance of the government’s role (using the tax incentive for 1st-time home buyers) in the purchase market , which is clearly inhibited by concerns over further home price erosion.<p />   We have overlaid borrower rates in the second graph below on the same timeline to show when the refinance inquiry started to heat up (April 2010) as rates began their downward trend falling 0.70% over the next four months to today’s levels of approximately 4.52%. Clearly the magnitude and velocity of the fall isn’t significant, but the rhetoric from the Fed has clearly indicated a period or prolonged low rates helping sustain and fuel inquiry for refinance. <br /> If you haven’t evaluated your loan recently, or you have a quote and simply want to see if it’s fair, you can use some of the free tools at <a href="http://www.lendingtree.com/mortgage-loans/loan-coach/checkup/">LendingTree</a> and also get a “<a href="http://www.lendingtree.com/stmrc/promotional_disclosures.asp?disclosures=00076&bp=v3&nonav=true">Best Deal Guarantee</a>." <br /><span style="color: #0000ff;"><span style="text-decoration: underline;"> </span></span> <br /> <span style="color: #548dd4;"><strong>Outlook<br /> </strong></span>Origination pipelines are extending, making it more difficult to measure the difference between “Applications” and “Actual” refinance loans being made (which, because of processing delays, will skew the results). As we move into next week with "existing home sales" on Tuesday (8/24), I would expect we will see a median price decline erasing much of the 5.2% month-over-mon<div class='p_embed p_image_embed'> <a href="http://posterous.com/getfile/files.posterous.com/temp-2010-08-20/JpuecvpAblgzlmakCEujHsgvcgmJnggJzHzGjdyetHCxazAuADlsAzjBmmsn/refinance_chart_LendingTree.jpg.scaled1000.jpg"><img alt="Refinance_chart_lendingtree" height="487" src="http://posterous.com/getfile/files.posterous.com/temp-2010-08-20/JpuecvpAblgzlmakCEujHsgvcgmJnggJzHzGjdyetHCxazAuADlsAzjBmmsn/refinance_chart_LendingTree.jpg.scaled500.jpg" width="500" /></a> </div> th gain posted in June.<br />  </span></span> </p> </p> <p><a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-recent-ref">Permalink</a> | <a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-recent-ref#comment">Leave a comment  »</a> </p><img src="http://feeds.feedburner.com/~r/LtPosterous/~4/kJlc4Rjn-_s" height="1" width="1"/> http://files.posterous.com/user_profile_pics/478824/twitter-icon_bigger_thumb.jpg http://posterous.com/users/5erz5lfeX4K5 Tree Social Media Tree Tree Social Media http://lt.posterous.com/chief-economist-cameron-findlay-on-recent-ref Tue, 17 Aug 2010 15:05:00 -0700 Chief Economist Cameron Findlay on future refinance eligibility http://feedproxy.google.com/~r/LtPosterous/~3/_mSDeODB5yw/chief-economist-cameron-findlay-on-future-ref http://lt.posterous.com/chief-economist-cameron-findlay-on-future-ref <p> <p><span style="color: #548dd4;"><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><strong><span style="color: #000000;">August 17, 2010</span><br /> </strong></span></span></span></p> <p><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><span style="color: #808080;">Below we graphed 10-year Treasury rates versus the national average 30-yr fixed rate mortgage, and also included the spread between the two over the past three years. </span><br />  </span></span></p> <p><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><span style="color: #808080;"><span style="color: #808080;">The investment community will drive Treasury rates higher or lower based on the expected influence of inflation (and other items), which erodes the fixed payments investors receive (as the concern for inflation rises prices fall and yield move higher). Today we are faced with the greater concern over disinflation (the opposite of inflation) and so Treasury prices move higher, and yields have been falling.<br /> </span></span> <br /> <span style="color: #808080;">[1] Rates have already come a long way following Treasury yields down, but Treasury yields are falling faster than mortgage rates as mortgage pipelines are choking with volume given underwriting / processing demands and [2] Government influence on mortgage rates is less influential today than back in 2008. Back then they still had a Fed target rate in excess of 2.00%  -  not a target range of 0.00% - 0.25% like we have today. </span><p />  <span style="color: #808080;">The most feasible control left was quantitative easing (the simultaneous printing of cash and purchasing of debt), which the Fed exited from in March 2010 . This was followed by the European debt crisis which began to pick up steam in May, allowing the Fed to back down given the demand for US debt from foreign investors looking for safety….this helped keep rates low.</span><p />   <span style="color: #000000;"><strong><span style="color: #548dd4;">So what next ?</span> </strong></span></span></span></p> <p><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><span style="color: #808080;">Moving forward we expect the government's next move will be to focus on eligibility (not on rate control), which means a possible nice Christmas present for those of you who do not qualify today for a refinance because of Debt to Income or Loan to Value constraints. There are no clear indications on how this would be implemented but the influence on mortgage rates to go lower is getting less and less the lower Treasury yields push  - meaning the government is running out of useful tools. <span style="text-decoration: underline;">I fully expect the government will support housing before bond holders' interests, meaning I’d expect a change to qualification that encourages refinance in the near term unless we see some significant signs of market stability</span>.</span></span></span></p> <p><span style="color: #808080; font-family: Arial Narrow, Helvetica, sans-serif; font-size: medium;"><span style="font-size: 15px;"><span style="color: #000000; font-family: Arial, Helvetica, sans-serif; font-size: small;"><span style="font-size: 13px;"><div class='p_embed p_image_embed'> <a href="http://posterous.com/getfile/files.posterous.com/temp-2010-08-17/ghihkCAHxttHzEHhhBlisGqylyhmlcwAqaaaepuABbwCAJcfgFBnaIncBsbv/LendingTree.jpg.scaled1000.jpg"><img alt="Lendingtree" height="312" src="http://posterous.com/getfile/files.posterous.com/temp-2010-08-17/ghihkCAHxttHzEHhhBlisGqylyhmlcwAqaaaepuABbwCAJcfgFBnaIncBsbv/LendingTree.jpg.scaled500.jpg" width="500" /></a> </div> <br /></span></span></span></span></p> </p> <p><a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-future-ref">Permalink</a> | <a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-future-ref#comment">Leave a comment  »</a> </p><img src="http://feeds.feedburner.com/~r/LtPosterous/~4/_mSDeODB5yw" height="1" width="1"/> http://files.posterous.com/user_profile_pics/478824/twitter-icon_bigger_thumb.jpg http://posterous.com/users/5erz5lfeX4K5 Tree Social Media Tree Tree Social Media http://lt.posterous.com/chief-economist-cameron-findlay-on-future-ref Tue, 17 Aug 2010 10:57:00 -0700 Chief Economist Cameron Findlay on housing starts and jobs http://feedproxy.google.com/~r/LtPosterous/~3/NRMFl43CJVg/chief-economist-cameron-findlay-on-housing-st-0 http://lt.posterous.com/chief-economist-cameron-findlay-on-housing-st-0 <p> <p> <blockquote><span style="font-family: Calibri, Verdana, Helvetica, Arial;"><span style="font-size: 11pt;">Aug. 17, 2010</span></span></blockquote> <blockquote><strong><span style="font-family: Calibri, Verdana, Helvetica, Arial;"><span style="font-size: 11pt;">Housing Starts</span></span></strong></blockquote> <blockquote><span style="font-family: Calibri, Verdana, Helvetica, Arial;"><span style="font-size: 11pt;"> Housing starts increased 1.7% month-over-month to 546,000 annualized units while building permits declined 3.2% to an annual pace of 565,000 units. In summary, the data reflected weaker-than-expected results giving further evidence to a slow recovery. Despite historically low rates, builders' efforts to sell new production homes remain hampered by the mounting foreclosures and continuing high delinquency rates. It's interesting to note that the timeline for recovery (when we refer to recovery think price stabilization, not necessarily growth) is now 12-24 months for most home builders.</span></span></blockquote> <blockquote><span style="font-family: Calibri, Verdana, Helvetica, Arial;"><span style="font-size: 11pt;"><strong>Home seizures</strong><p /> Let's place these results into perspective. RealtyTrac reports that home seizures jumped 38% year-over-year in the 2nd Qtr, which puts lenders on pace to claim more than 1 million properties in 2010 - approximately double the annualized production of housing starts. From that simple result you can see why understanding the existing inventory and "shadow" inventory of homes pending foreclosure currently delinquent remains such a vital element to understand what is going on in the economy....even more than these results released today.</span></span></blockquote> <blockquote><span style="font-family: Calibri, Verdana, Helvetica, Arial;"><span style="font-size: 11pt;"><strong>Jobs</strong><p /> Jobs are critical to the success or failure of the market. By now that has been made clear, but consider: If jobs can not be created fast enough the government will place homeowners first before investors in bonds. For this reason I do not rule out further government intervention to drive rates lower - or - to expand lending parameters for borrowers so more people can qualify to drive down borrowing costs on an expanded pool of borrowers who remain current on their mortgage (potentially allowing for refinancing with higher Debt-to-Income ratio's).<p /> LendingTree has been working in Washington on a number of these issues with state Senators and members from the Treasury department on behalf of borrowers to lower borrowing costs. These efforts are ultimately aimed at encouraging consumer spending  - which will help support jobs growth.<p /></span></span></blockquote> </p> </p> <p><a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-housing-st-0">Permalink</a> | <a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-housing-st-0#comment">Leave a comment  »</a> </p><img src="http://feeds.feedburner.com/~r/LtPosterous/~4/NRMFl43CJVg" height="1" width="1"/> http://files.posterous.com/user_profile_pics/478824/twitter-icon_bigger_thumb.jpg http://posterous.com/users/5erz5lfeX4K5 Tree Social Media Tree Tree Social Media http://lt.posterous.com/chief-economist-cameron-findlay-on-housing-st-0 Wed, 21 Jul 2010 14:37:00 -0700 Chief Economist Cameron Findlay on where Fed policy may be heading http://feedproxy.google.com/~r/LtPosterous/~3/m_R6cMxYeEY/chief-economist-cameron-findlay-on-where-fed http://lt.posterous.com/chief-economist-cameron-findlay-on-where-fed <p> <p><span style="color: #548dd4;"><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><strong>July 21, 2010<br /> </strong></span></span></span><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;">Chairman of the Federal Reserve Ben Bernanke - speaking today in testimony to the Senate Banking Committee - has alluded to a few items the market had been guessing about but to date: Mainly, when will the Fed exit from the more than $1.2 trillion dollars of Agency MBS [Mortgage Backed Securities], essentially withdrawing liquidity from the market? The answer was delivered in three parts;</span></span></p> <p><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><br /> 1. The Fed may simply chose to clarify the expected length of protracted low rates, erasing much of any concern over inflation by extending the timeline on low rates. Consider that the bigger risk today is deflation, which is when lower consumer confidence makes people unwilling to spend.<br /> </span></span><span style="font-size: 11pt;"><span style="font-family: Calibri, Verdana, Helvetica, Arial;"><br /> </span><span style="font-family: Arial Narrow;">2. A second wave of Quantitative Easing <<span style="color: #0000ff;"><span style="text-decoration: underline;"><a href="http://www.cnbc.com/id/15840232?video=1144280754&play=1">http://www.cnbc.com/id/15840232?video=1144280754&play=1</a></span></span>> is being considered. This is well within the tool kit for the Fed. Expect this to drive down the value of the dollar.<br /> </span><span style="font-family: Calibri, Verdana, Helvetica, Arial;"><br /> </span><span style="font-family: Arial Narrow;">a. Quantitative easing encourages inflation…if inflation is a risk expect HIGHER rates<br /> </span><span style="font-family: Calibri, Verdana, Helvetica, Arial;"><br /> </span><span style="font-family: Arial Narrow;">b. This may also include re-investment of the expiring bonds from the pool of $1.2 trillion. Today the pool is simply getting smaller day by day without funds being re-invested.<br /> </span><span style="font-family: Calibri, Verdana, Helvetica, Arial;"><br /> </span><span style="font-family: Arial Narrow;">3. Reducing the rate paid on banks' excess reserves held at the Fed. This has the effect of encouraging banks to lend the cash, but historically we have seen this has had limited influence on lending due to remaining concerns over borrower credit.<br /> </span><span style="font-family: Calibri, Verdana, Helvetica, Arial;"><br /> </span><span style="font-family: Arial Narrow;"> <br /> To gauge how the market reacted, mortgage rates declined as the S&P dropped 1.5% and investors placed funds to work in bonds. Graphed below is the FNMA Current Coupon, which we have written about in a few of our prior articles. It shows the impact to Current Coupon and today’s decline of approximately 0.10%.<br /> <br /> <span style="color: #808080;">Pacific Time Zone</span></span></span></p> <p><span style="font-size: 11pt;"><span style="font-family: Arial Narrow;"><span style="color: #808080;"><div class='p_embed p_image_embed'> <a href="http://posterous.com/getfile/files.posterous.com/temp-2010-07-21/lczluuCeqtsiHHGEqzHwElIrJIyfrmgBlgyyFdsyrncnuroznubgqHFgdGpv/bernanketalk.png.scaled1000.png"><img alt="Bernanketalk" height="511" src="http://posterous.com/getfile/files.posterous.com/temp-2010-07-21/lczluuCeqtsiHHGEqzHwElIrJIyfrmgBlgyyFdsyrncnuroznubgqHFgdGpv/bernanketalk.png.scaled500.png" width="500" /></a> </div> <br /></span></span></span></p> </p> <p><a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-where-fed">Permalink</a> | <a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-where-fed#comment">Leave a comment  »</a> </p><img src="http://feeds.feedburner.com/~r/LtPosterous/~4/m_R6cMxYeEY" height="1" width="1"/> http://files.posterous.com/user_profile_pics/478824/twitter-icon_bigger_thumb.jpg http://posterous.com/users/5erz5lfeX4K5 Tree Social Media Tree Tree Social Media http://lt.posterous.com/chief-economist-cameron-findlay-on-where-fed Fri, 16 Jul 2010 08:44:00 -0700 Chief Economist Cameron Findlay on today's record-breaking mortgage rates http://feedproxy.google.com/~r/LtPosterous/~3/EwpqyZbnXJ0/chief-economist-cameron-findlay-on-todays-rec http://lt.posterous.com/chief-economist-cameron-findlay-on-todays-rec <p> <p><span style="color: #548dd4;"><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><strong>July 16, 2010</strong></span></span></span></p> <p><span style="color: #548dd4;"><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><strong><span style="color: #000000; font-weight: normal;">Records were made to be broken, and today we broke another one with mortgage rates. The “Current Coupon,” which serves as a barometer for mortgage rates, broke below the prior record of 3.63% and today reached a new record low of 3.51%, pushing today's borrower rates down to 4.59% The Current Coupon is used by investors to gauge prepayment exposure. It is the "to-be-announced" [TBA] mortgage security that trades closest to par, or a value of 100-00. It is the best gauge of the current market conditions for investors in terms of translating price to yield.</span></strong></span></span></span></p> <p><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"> <br /> <span style="color: #548dd4;"><strong>For Investors<br /> </strong></span>The coupon into which loans are eventually pooled via the securitization process into [RMBS] Residential Mortgage Backed Securities is the foundation on which mortgage rates are offered to borrowers. In today’s market with most credit concerns out of the way for investors in RMBS, the main concern is prepayment exposure. This is picking up speed given how low rates have gone in the past month.<br /> <br /> <span style="color: #548dd4;"><strong>For Borrowers<br /> </strong></span>For a sense of the magnitude in just how quickly rates have changed we have graphed the 30-year fixed conforming rate below. At the start of April rates were at 5.25% versus today’s rate of 4.59%. Said another way, on a $200,000 loan amount today you would be paying $80 less per month. Qualification remains tight, constrained by depreciated home valuations, making the loan amount relative to the home value difficult to overcome. But we have a free tool that allows for you to explore options, understand at what level refinance makes sense and even to be sent an alert should levels reach a place in time where refinance or purchase is financially viable for you. We call this a “Mortgage check Up <<span style="color: #0000ff;"><span style="text-decoration: underline;"><a href="http://www.lendingtree.com/mortgage-loans/loan-coach/checkup/">http://www.lendingtree.com/mortgage-loans/loan-coach/checkup/</a></span></span>> ”</span></span></p> <p> </p> <p><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><div class='p_embed p_image_embed'> <a href="http://posterous.com/getfile/files.posterous.com/temp-2010-07-16/qfBzagHofjGGFicCforxbcmixHkfgddlfzxbkbpkDGnuvcrlylExCJnlJror/borrowerrates.jpg.scaled1000.jpg"><img alt="Borrowerrates" height="354" src="http://posterous.com/getfile/files.posterous.com/temp-2010-07-16/qfBzagHofjGGFicCforxbcmixHkfgddlfzxbkbpkDGnuvcrlylExCJnlJror/borrowerrates.jpg.scaled500.jpg" width="500" /></a> </div> <br /></span></span></p> </p> <p><a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-todays-rec">Permalink</a> | <a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-todays-rec#comment">Leave a comment  »</a> </p><img src="http://feeds.feedburner.com/~r/LtPosterous/~4/EwpqyZbnXJ0" height="1" width="1"/> http://files.posterous.com/user_profile_pics/478824/twitter-icon_bigger_thumb.jpg http://posterous.com/users/5erz5lfeX4K5 Tree Social Media Tree Tree Social Media http://lt.posterous.com/chief-economist-cameron-findlay-on-todays-rec Thu, 15 Jul 2010 12:36:00 -0700 Chief Economist Cameron Findlay on refinance volume http://feedproxy.google.com/~r/LtPosterous/~3/MhRltreqrAc/chief-economist-cameron-findlay-on-refinance http://lt.posterous.com/chief-economist-cameron-findlay-on-refinance <p> <p><span style="color: #538cd3;"><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><strong>July 15, 2010<br /> </strong></span></span></span><span style="font-size: 11pt;"><span style="font-family: Calibri, Verdana, Helvetica, Arial;"><br /> </span><span style="font-family: Arial Narrow;">The Mortgage Bankers Association yesterday released their new forecast on refinance volume. For perspective on the impact low rates have had on the industry: In January 2010 the refinance volume forecast for the 2nd quarter of 2010 was $148 billion, compared to the actual result of just less than $304 billion. It puts into perspective how fragile the market is and how resilient the refinance industry has been (given the suppressed low rates driven by a domestic recovery that has been weaker than expected - and a foreign debt crisis).<br /> <br /> Rates have declined so fast and with such magnitude those borrowers who have refinanced only 1 year ago are already asking the question - should I consider it again ? From August 2009 to today, rates on 30-year fixed mortgages have declined by 0.92%. On a $200k mortgage that’s a savings of $112 per month or $1,344 a year. If you plan on staying in the house three years that’s a savings of more than $4,000 you could be missing.</span></span></p> <p><span style="font-size: 11pt;"><span style="font-family: Arial Narrow;"><br /> <span style="color: #0000ff;"><span style="text-decoration: underline;"><a href="http://www.lendingtree.com/">http://www.lendingtree.com/</a><br /> </span></span></span></span></p> <p><span style="font-size: 11pt;"><span style="font-family: Arial Narrow;"><span style="color: #0000ff;"><span style="text-decoration: underline;"><div class='p_embed p_image_embed'> <img alt="Mbarefinance" height="458" src="http://posterous.com/getfile/files.posterous.com/temp-2010-07-15/yjnvyyeAFtlvtjtiaFeeEzIstxGJdqaCutfychxuwHoJoCugbJmrBqagkqhp/MBArefinance.jpg.scaled500.jpg" width="410" /> </div> </span></span></span></span></p> <p><span style="font-size: 11pt;"><span style="font-family: Arial Narrow;"><span style="color: #0000ff;"><span style="text-decoration: underline;"><div class='p_embed p_image_embed'> <img alt="Mbarefinance2" height="475" src="http://posterous.com/getfile/files.posterous.com/temp-2010-07-15/xueDcabzExEuyduedclxdtHmeGGnbGynrwnDFlBvpxctfjhJiixmihrIgxyH/MBArefinance2.jpg.scaled500.jpg" width="396" /> </div> <br /></span></span></span></span></p> </p> <p><a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-refinance">Permalink</a> | <a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-refinance#comment">Leave a comment  »</a> </p><img src="http://feeds.feedburner.com/~r/LtPosterous/~4/MhRltreqrAc" height="1" width="1"/> http://files.posterous.com/user_profile_pics/478824/twitter-icon_bigger_thumb.jpg http://posterous.com/users/5erz5lfeX4K5 Tree Social Media Tree Tree Social Media http://lt.posterous.com/chief-economist-cameron-findlay-on-refinance Thu, 15 Jul 2010 12:17:00 -0700 Chief Economist Cameron Findlay compares 30-year and 15-year mortgages http://feedproxy.google.com/~r/LtPosterous/~3/_VGLgs2NEO0/chief-economist-cameron-findlay-compares-30-y http://lt.posterous.com/chief-economist-cameron-findlay-compares-30-y <p> <p><span style="color: #1f497d;"><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><strong>July 15, 2010</strong></span></span></span></p> <p><span style="color: #1f497d;"><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><strong><br /> </strong></span></span></span><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;">30-year and 15-year mortgage rates have declined substantially over the course of the past few months. Since April 15th, spreads (the difference between rate paid in each alternative) have compressed. On a monthly mortgage payment basis this equates into 15-year mortgages now costing $43 per month more than they cost back in April relative to their 30-year counterpart.<br /> <br /> Below we show a table that describes how the rate has changed and how this change equates into additional costs borrowers will incur by electing a 15-year mortgage today than what it would have cost back in April. The cost is lower today by almost $25 per month. But relative to the 30-year mortgage - that declined by $68 per month - the 15-year mortgage alternative is not as attractive as it was.<br /> <br /> We have seen substantial interest peak in 30-year mortgages with lower rates as borrowers stretch for affordability inside agency or FHA lending guidelines, and do not expect to see a large drive in 15-year originations until a sense of consumer confidence returns. Taking additional higher payments during a time of high unemployment is not the trend we normally see - in fact, it's quite the opposite as borrowers lengthen their payment terms, in effect lowering their monthly payment.<br /> <br /> <br /> April 15th Nat’ Avg Fixed 30yr 5.19% $1,096 mthly<br /> 15yr 4.38% $1,517 mthly<br /> <strong>Spread 0.81% $+421<br /> </strong> <br /> Current 30yr 4.63% $1,028 mthly<br /> 15yr 4.13% $1,492 mthly<br /> <strong>Spread 0.50% $+464</strong></span></span></p> <p> </p> <p><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><strong><div class='p_embed p_image_embed'> <a href="http://posterous.com/getfile/files.posterous.com/temp-2010-07-15/AkdxoabHxvlhxBbGIfzIxyDknHgmjHIhpcfgohruqIfCemctaAhrCDgqGIhC/30yr15yrmortgages.jpg.scaled1000.jpg"><img alt="30yr15yrmortgages" height="257" src="http://posterous.com/getfile/files.posterous.com/temp-2010-07-15/AkdxoabHxvlhxBbGIfzIxyDknHgmjHIhpcfgohruqIfCemctaAhrCDgqGIhC/30yr15yrmortgages.jpg.scaled500.jpg" width="500" /></a> </div> <br /></strong></span></span></p> </p> <p><a href="http://lt.posterous.com/chief-economist-cameron-findlay-compares-30-y">Permalink</a> | <a href="http://lt.posterous.com/chief-economist-cameron-findlay-compares-30-y#comment">Leave a comment  »</a> </p><img src="http://feeds.feedburner.com/~r/LtPosterous/~4/_VGLgs2NEO0" height="1" width="1"/> http://files.posterous.com/user_profile_pics/478824/twitter-icon_bigger_thumb.jpg http://posterous.com/users/5erz5lfeX4K5 Tree Social Media Tree Tree Social Media http://lt.posterous.com/chief-economist-cameron-findlay-compares-30-y Tue, 13 Jul 2010 16:06:00 -0700 Chief Economist Cameron Findlay on cautious optimism and "the calm before the storm" http://feedproxy.google.com/~r/LtPosterous/~3/Iu9uFxSfziM/chief-economist-cameron-findlay-on-cautious-o http://lt.posterous.com/chief-economist-cameron-findlay-on-cautious-o <p> <p><span style="color: #548dd4;"><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><strong>July 13, 2010</strong></span></span></span></p> <p><span style="color: #548dd4;"><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><strong><br /> </strong></span></span></span><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;">The last week has been very quiet in terms of market changes in rates (they remain low) or economic news to drive the market directionally one way or another. Guidance has been suspiciously absent. For those of you who have sailed before, I equate this to the “calm before the storm” where we are cautiously optimistic about a sustained period of low rates for consumers. At the same time, however, we recognize the government and foreign influences that are driving rates low can’t be sustained for much longer without some additional intervention. <br /> <br /> <span style="color: #548dd4;">Future market events of significance to monitor; <br /> </span>July 15th – Producer Price Index / Continuing Jobless Claims <br /> July 16th – Consumer Price Index<br /> July 20th – Housing Starts / Building Permits<br /> <br /> Weaker results in consumer demand or housing will result in a flight to quality into bonds, meaning bond prices will move higher and yields move lower - influencing lower mortgage rates yet again. LendingTree is focused on delivering a quality low rate through our competitive network and recognizes that rate is only one element in the equation of qualification. Today, more than ever, "loan-to-value" is critical and requires special mention. With more than 50% of the workforce in small business (defined as firms less than 50 employees), the exposure to government intervention and support of this sector remains real. Support for small business can equate into improved home prices and hence reduce disqualification because of "loan-to-value" constraints set by the agencies (FNMA / FHLMC) or GNMA.<br /> <br /> It’s nice reporting we have no significant events of concern. It’s unusual, but also a welcome pause in a market that has for the past two years been on high alert with almost daily events of significance. Historic low rates remain today and that clearly represents an opportunity for those considering refinance.<br /> </span></span> </p> </p> <p><a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-cautious-o">Permalink</a> | <a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-cautious-o#comment">Leave a comment  »</a> </p><img src="http://feeds.feedburner.com/~r/LtPosterous/~4/Iu9uFxSfziM" height="1" width="1"/> http://files.posterous.com/user_profile_pics/478824/twitter-icon_bigger_thumb.jpg http://posterous.com/users/5erz5lfeX4K5 Tree Social Media Tree Tree Social Media http://lt.posterous.com/chief-economist-cameron-findlay-on-cautious-o Fri, 02 Jul 2010 10:17:00 -0700 Chief Economist Cameron Findlay on recent unemployment figures http://feedproxy.google.com/~r/LtPosterous/~3/cZlF4TkDM6s/chief-economist-cameron-findlay-on-recent-une http://lt.posterous.com/chief-economist-cameron-findlay-on-recent-une <p> <p><span style="color: #548dd4;"><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><strong>July 2, 2010</strong></span></span></span></p> <p><span style="color: #548dd4;"><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><strong><br /> </strong></span></span></span><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><strong>Unemployment Rate </strong>9.5% Negative – Lower mainly because of reduced labor force which declined by 650,000 jobs</span></span></p> <p><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><br /> <strong>Change in Non Farm Payrol</strong>ls -125k Negative – Population is 130.47 million (seasonally adjusted)</span></span></p> <p><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><br /> <strong>Change in Private Payrolls </strong>+83k Negative – We need growth of +175,000 just to break even with population changes. Private Payrolls is 107.7 million or approximately 83% of Total Non Farm Payrolls<br /> <br /> With the last week of bearish economic releases I was honestly ready for some good news today ahead of a long weekend. The overwhelming reason for the improvement in the numbers was not more jobs, simply a smaller labor force which declined by 650,000 jobs during the month to 153.74 million. That's roughly the same number of people looking for jobs in November 2009 when we had 10.0% unemployment.<br /> <br /> <span style="color: #548dd4;">Can Unemployment Get Worse ? <br /> </span>Short answer, yes. A big contributor is the size of the Labor force driven by the length of time people have been looking (on average ~35.2 weeks) which indicates many are being discouraged from looking and hence excluded from the survey, then re-included as conditions improve. Both Bloomberg and MBA forecasts expect higher remaining levels of unemployment until the 1st Qtr 2011 per the graph below (use this as a benchmark - not a guide).</span></span></p> <p><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><br /> <span style="color: #548dd4;">Who Is Impacted the Most ?<br /> </span>Construction workers remain at the top of the impacted list with a rate of unemployment closer to 20%, Teenagers seeking work are at 25% for perspective and the ratio of Black vs White unemployment remains double with Black population at 15.4% and White Population at 8.6%.<br /> <br /> <span style="color: #548dd4;">For Borrowers<br /> </span>The worst was already priced into the market, and this report held up to that pessimistic expectation, so we see no change in rates for borrowers. Clearly there is a sense of angst in the trading that shows people are just looking for an excuse to see higher rates. But delivery of bad data like this continues to wane negatively on the stock market. That results in investors moving toward the safety of bonds, and drives their value higher. All that translates to lower rates.<br /> <br /> <span style="color: #808080;">The Civilian Labor Force is 153.74million based on a Population of 237.69million which equates to a participation rate of 64.7%</span></span></span></p> <p><div class='p_embed p_image_embed'> <a href="http://posterous.com/getfile/files.posterous.com/temp-2010-07-02/oemeEgsuHtlchJhazqjpfzIEkkubcxjAAGfkjHxswjpmgFFmlaAeoJIlCwwl/unemploymentchart1.jpg.scaled1000.jpg"><img alt="Unemploymentchart1" height="546" src="http://posterous.com/getfile/files.posterous.com/temp-2010-07-02/oemeEgsuHtlchJhazqjpfzIEkkubcxjAAGfkjHxswjpmgFFmlaAeoJIlCwwl/unemploymentchart1.jpg.scaled500.jpg" width="500" /></a> </div> </p> <p><span style="color: #808080; font-family: Arial Narrow, Helvetica, sans-serif; font-size: medium;"><span style="font-size: 15px;"><span style="color: #000000; font-family: Arial, Helvetica, sans-serif; font-size: small;"><span style="font-size: 13px;"><div class='p_embed p_image_embed'> <a href="http://posterous.com/getfile/files.posterous.com/temp-2010-07-02/HpsGquFgphmpeGulpgsqcpAsgymIBDswDwejqhjxxwytyitrzrwpvCAcxiAC/unemploymentchart2.jpg.scaled1000.jpg"><img alt="Unemploymentchart2" height="550" src="http://posterous.com/getfile/files.posterous.com/temp-2010-07-02/HpsGquFgphmpeGulpgsqcpAsgymIBDswDwejqhjxxwytyitrzrwpvCAcxiAC/unemploymentchart2.jpg.scaled500.jpg" width="500" /></a> </div> <br /></span></span></span></span></p> </p> <p><a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-recent-une">Permalink</a> | <a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-recent-une#comment">Leave a comment  »</a> </p><img src="http://feeds.feedburner.com/~r/LtPosterous/~4/cZlF4TkDM6s" height="1" width="1"/> http://files.posterous.com/user_profile_pics/478824/twitter-icon_bigger_thumb.jpg http://posterous.com/users/5erz5lfeX4K5 Tree Social Media Tree Tree Social Media http://lt.posterous.com/chief-economist-cameron-findlay-on-recent-une Thu, 01 Jul 2010 16:26:00 -0700 Chief Economist Cameron Findlay on 2nd Quarter, 2010 Mortgage Origination http://feedproxy.google.com/~r/LtPosterous/~3/T6d7kPdDjG0/chief-economist-cameron-findlay-on-2nd-quarte http://lt.posterous.com/chief-economist-cameron-findlay-on-2nd-quarte <p> <p><span style="color: #548dd4;"><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><strong>July 1, 2010<br /> </strong></span></span></span><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;">June narrowly delivered the fourth straight month of growth in mortgage origination. This was spurred by low interest rates, which declined by 0.44% to 4.68% during the 2nd Quarter. The mix of loans originated under the GNMA guarantee remained at 32% YTD as demand for RMBS (Residential Mortgage Backed Securities) continues to drive prices to obscenely high prices, resulting in lower yields. The market of loans outstanding currently (approximately $5.2 trillion), heavily depends on a steady supply of new loans for investors. For now it is a stronger demand and limited supply (constrained by borrower’s ability to qualify) that is helping keep prices suspended higher and contributing to lower mortgage rates.<br /> <br /> If we continue for the balance of the year with the current pace of origination it is expected we will originate $508 billion in the second half of 2010 (seasonally adjusted).<br /> - Full Year Estimate : $1,099 billion. For perspective that’s only 64% of last year’s $1,724 billion.</span></span></p> <p><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><div class='p_embed p_image_embed'> <a href="http://posterous.com/getfile/files.posterous.com/temp-2010-07-01/JCsEBiwlnqabEwgHviEomDJcqqBqjkaApbzGozEuyekyaIrCwsBDnzBemArb/mortgageorigination2010_2.jpg.scaled1000.jpg"><img alt="Mortgageorigination2010_2" height="459" src="http://posterous.com/getfile/files.posterous.com/temp-2010-07-01/JCsEBiwlnqabEwgHviEomDJcqqBqjkaApbzGozEuyekyaIrCwsBDnzBemArb/mortgageorigination2010_2.jpg.scaled500.jpg" width="500" /></a> </div> <br /></span></span></p> </p> <p><a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-2nd-quarte">Permalink</a> | <a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-2nd-quarte#comment">Leave a comment  »</a> </p><img src="http://feeds.feedburner.com/~r/LtPosterous/~4/T6d7kPdDjG0" height="1" width="1"/> http://files.posterous.com/user_profile_pics/478824/twitter-icon_bigger_thumb.jpg http://posterous.com/users/5erz5lfeX4K5 Tree Social Media Tree Tree Social Media http://lt.posterous.com/chief-economist-cameron-findlay-on-2nd-quarte Thu, 01 Jul 2010 16:19:00 -0700 Chief Economist Cameron Findlay on what's needed to improve pending home sales http://feedproxy.google.com/~r/LtPosterous/~3/nhgmmgd1ekc/chief-economist-cameron-findlay-on-whats-need http://lt.posterous.com/chief-economist-cameron-findlay-on-whats-need <p> <p><span style="color: #548dd4;"><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;"><strong>July 1, 2010<br /> </strong></span></span></span><span style="font-family: Arial Narrow;"><span style="font-size: 11pt;">The number of contracts to purchase previously owned homes epitomized the analogy of “falling off a cliff” this morning with a decline of (30)% month over month, driven primarily by expiration of the tax credit. That’s about twice as bad as what was expected in the market and the largest decline recorded since 2001 when the index was released. Consider this a rebalancing month. We can all agree it was not expected to deliver a sunny report - it was only the magnitude of the decline that took people by surprise.<br /> <br /> What we Need:<br /> </span></span><span style="font-size: 11pt;"><span style="font-family: Symbol;">· </span><span style="font-family: Arial Narrow;">Improvement in unemployment in terms of both the number of jobs and hourly wages to improve consumers ability to spend<br /> </span><span style="font-family: Calibri, Verdana, Helvetica, Arial;"><br /> </span><span style="font-family: Symbol;">· </span><span style="font-family: Arial Narrow;">Return of confidence in consumers – data shows most are gun shy to spend over concerns of a downturn and are instead focused on savings<br /> </span><span style="font-family: Calibri, Verdana, Helvetica, Arial;"><br /> </span><span style="font-family: Symbol;">· I</span><span style="font-family: Arial Narrow;">mproved levels of delinquency, this is a symptom not a solution however<br /> </span><span style="font-family: Calibri, Verdana, Helvetica, Arial;"><br /> </span><span style="font-family: Arial Narrow;"> <br /> The most concerning part of this report is that it is a leading (not lagging) indicator of Existing Home Sales (which is approximately 90% of the housing market), so I expect this will serve to increase inventories and again further reduce prices (July 22nd release).</span></span></p> <p><span style="font-size: 11pt;"><span style="font-family: Arial Narrow;"><div class='p_embed p_image_embed'> <a href="http://posterous.com/getfile/files.posterous.com/temp-2010-07-01/tdkqIhvqrvklEGvjkFeBdrGJwJAnghcvvcgwEhEelbeHqwifIxseIvkHFpsn/pendinghomesales.jpg.scaled1000.jpg"><img alt="Pendinghomesales" height="500" src="http://posterous.com/getfile/files.posterous.com/temp-2010-07-01/tdkqIhvqrvklEGvjkFeBdrGJwJAnghcvvcgwEhEelbeHqwifIxseIvkHFpsn/pendinghomesales.jpg.scaled500.jpg" width="500" /></a> </div> <br /></span></span></p> </p> <p><a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-whats-need">Permalink</a> | <a href="http://lt.posterous.com/chief-economist-cameron-findlay-on-whats-need#comment">Leave a comment  »</a> </p><img src="http://feeds.feedburner.com/~r/LtPosterous/~4/nhgmmgd1ekc" height="1" width="1"/> http://files.posterous.com/user_profile_pics/478824/twitter-icon_bigger_thumb.jpg http://posterous.com/users/5erz5lfeX4K5 Tree Social Media Tree Tree Social Media http://lt.posterous.com/chief-economist-cameron-findlay-on-whats-need