AgentIndustry News

What’s up with housing this week?

Mortgage market commentary
Published on Jul 27, 2007

In the financial panic underway now, frightened money is pouring into Treasurys, but for the first time in modern experience the overflow is only a modest benefit to mortgages. The 10-year Treasury note is all the way to 4.78 percent, down a half-percent in three weeks, but mortgages are stuck near 6.625 percent, just a hair off the June high. This disconnect is the mark of credit suspicion extending all the way into Fannie/Freddie "A" paper -- very much misplaced concern, says here. Mortgage defaults will spread into Alt-A, and some parts of "A" adjustable-rate pools, but the old-fashioned, main-line Agency underwriting will hold up. The Treasury-mortgage spread should begin to close, to the benefit of mortgage applicants. There are two separate credit events underway, and a gazillion money bloggers are trying to combine the two into a financial cascade. Don't buy (yet). Event one is the still-orderly downside to the biggest-ever boom in home prices. Event number two is the disorderly...

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