Industry NewsMarkets & Economy

Borrowers look like IEDs to lenders

Commentary: Fear has thinned the pool of borrowers to the point that housing cannot recover

Today's payroll flop -- only 20,000 real jobs created in May -- will take some time to settle all the way in. Immediately: 10-year T-notes are 3.22 percent (from 3.36 percent yesterday and 3.99 percent six weeks ago), and mortgages are below 5 percent. The payroll report has confirmation: New unemployment has held high for five months; May retail sales look soggy ("same-store" data); auto sales flubbed in May; and housing shows every sign of a serious fade, post-tax credit. Purchase applications have hit a 13-year low; the unemployed do not apply, nor do the underwater, and the few, the brave, who think they are qualified often find themselves in the "rejected" pile. In days ahead, the entire recovery camp from government to stock-pushers has more than explaining to do. It must change its mind. All in one furball: How can mortgage rates be so low, and home prices so low, affordability the best ever measured, yet housing defies recovery? One unifying answer: credi...