Rates are rising again this morning — possibly an overreaction in thin holiday markets to strong job-market news, but rising.

The 10-year T-note is 4.75 percent versus 4.66 percent yesterday and 4.5 percent four weeks ago; that upward drive has taken mortgages from just above 6 percent to 6.25 percent yesterday and almost 6.375 percent today.

Rates are rising again this morning — possibly an overreaction in thin holiday markets to strong job-market news, but rising.

The 10-year T-note is 4.75 percent versus 4.66 percent yesterday and 4.5 percent four weeks ago; that upward drive has taken mortgages from just above 6 percent to 6.25 percent yesterday and almost 6.375 percent today. March payrolls increased by 180,000, about half-again the forecast, and unemployment fell to 4.4 percent, which has crushed any thought of near-term Fed easing.

The last few weeks look the same on a rate chart as a half-dozen other intervals since the Fed paused at 5.25 percent last summer, but I think the game is now changing. Despite today’s job news, the economy really is weakening.

In the prior intervals, an outbreak of hopeful expectation for recession (they don’t call bond traders “ghouls” for nothing) triggered a spate of falling rates, and then gradually reversed as the economy proved resilient. Each time the weak-economy hopes centered on the financial markets’ impatient expectation that housing will correct quickly and deeply, the way financial markets do. Now the overall economy looks wobbly, whether housing spillover or something else.

Early this week, lost in the aftermath of Federal Reserve Chair Ben Bernanke’s testimonial garble: a sag in the twin reports for March from the Institute for Supply Management. For 25 years, these late-month surveys of purchasing managers have been excellent real-time economic indicators, and both tanked: manufacturing from 52.3 to 50.9, and the vastly larger service sector from 54.3 to 52.4, that the lowest reading in years. A “50” is the line between expansion and contraction.

Both ISM surveys had distinctly weak employment sectors, which do not support today’s Department of Labor figures. Further: although the DOL payroll report is the most-watched datum each month, it is more prone to large revision than any other economic data. Both surveys also had high and rising figures for prices.

Those price rises were energy-related, oil again pushing $65/bbl. That spike was allegedly caused by Iranian Brit-nabbing, but upon their release as an “Easter gift,” oil did not move down a nickel. Oil is under consumption/supply pressure, not transient Gulf jitters, and in the mid-sixty-buck range is an economic drag.

Credit quality is deteriorating in commercial bank portfolios. Not securitized subprime, piggyback and Alt-A trash, but old-fashioned commercial and construction loan trash. Banks used to make loans to businesses, which today get their money elsewhere; commercial banks are nouveau S&Ls, 60 percent exposed to real estate in one way or another. Commercial and construction loans by themselves in small banks aggregate to 40 percent of loan portfolios.

A flat report for existing-home sales and unsold inventories was misinterpreted (again) as a sign of housing bottom. New applications for purchase mortgages slipped last week, but refis are running way ahead of rate-advantage model, especially so in light of the rise in fixed rates. The refi run appears to be ARM borrowers escaping mid-7 percent resets for low-6 percent fixed rates, but higher than they had.

Easily the best work so far on the mortgage/housing recession has been done by Chris Cagan (www.firstamres.com, hunt for his “Mortgage Payment Reset”). He has quantified the key foreclosure risk group: of mortgaged households, 15.8 percent have less than 10 percent equity in their homes. If anything big goes wrong in these households, they are the ones that will be unable to resell — unable to hire brokers and pay selling costs. If home prices fall even a little bit in vulnerable regions, as they surely will, then the low-equity fraction will increase.

I continue to believe that housing will be a several-year drag, not a debacle, but a weakening general economy would be a risk multiplier.

Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at lbarnes@boulderwest.com.

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