Refinance Activity Surges as Rates Fall, Impacts Mortgage REITs
Mortgage refinance applications, as measured by the MBA (Mortgage Bankers Association) Refinance Index, rose 16% for the week ending February 5.
Mortgage rates have lagged the rally in bonds, so applications have been slow to reflect the new reality in the bond market.
During the week ending February 5, 2016, the average 30-year fixed-rate mortgage fell by 7 basis points. The ten-year bond yield fell by 8 basis points.
In judicial states, foreclosures can take years. Judges are often reluctant to push delinquent borrowers out of their homes.
One way of thinking about the employment cost index is that it represents the wage side of the wage-price spiral, whereas the CPI represents the price side.
The labor force participation rate is the ratio of the labor force against its demographic cohort. Since 2008, this rate has fallen to late-1970s levels.
In January 2016, the unemployment rate fell from 5.0% to 4.9%, or by about 7.8 million people. The underemployment rate was flat at 9.9%.
Mortgage REITs such as Annaly Capital Management (NLY), MFA Financial (MFA), and American Capital Agency (AGNC) are big holders of Ginnie Mae TBAs.
For the week ending January 29, Fannie Mae TBAs ended at 104 22/32. They rose by 2 ticks to go out at 104 24/32 last week.
Mortgage rates are the lifeblood of the housing market. The Fed helped the housing market when it pushed rates lower to allow people to refinance.
Ten-year bond yields influence everything from mortgage rates to corporate debt. Now, they’re the benchmark for long-term US interest rates.
The equity sell-off continued last week. Personal incomes rose, but personal spending didn’t. Construction spending disappointed as well.
This week, investors will still be digesting the jobs report from last Friday. The biggest data points will be the JOLTS jobs report and retail sales.
On February 3, General Growth Properties’ (GGP) stock closed at $28.10.
General Growth Properties (GGP) management scheduled a conference call to discuss its 4Q15 earnings and provide some outlook on the future.
To lower its effective borrowing costs and extend its maturity profile, GGP was active in unsecured and secured credit markets in fiscal 2015.
General Growth Properties (GGP) has development and redevelopment activities totaling approximately $2.3 billion.
General Growth Properties’ funds from operations per diluted share increased to $0.43 in 4Q15 from $0.38 in 4Q14.
General Growth Properties’ (GGP) same-store occupancy rate fell from 96.7% in 4Q14 to 96.5% in 4Q15.
Minimum rent contributed to 60.1% of General Growth Properties’ total revenue in 4Q15.