Black Knight, reports the following “first look” at August 2019 month-end mortgage performance statistics derived from its loan-level database representing the majority of the national mortgage market.
– August’s 36,200 foreclosure starts made for the lowest single-month total since December 2000
– The number of loans in active foreclosure inventory also fell; at 253,000, it’s the fewest since 2005
– Prepayment activity – typically a good indicator of refinance activity – continues to press upward, increasing 5% from July to reach a three-year high
– August’s prepayment rate was up 62% from the same time last year and 2.5 times the 18-year low hit in January
– Given a 30-45 day closing window, the month’s prepayment activity reflects June/July interest rates; as rates fell further in August and September, the peak in refinance-driven prepayments is likely still to come
US stocks lower
U.S. stocks opened slightly lower on Monday after manufacturing reports in Europe indicated growth was grinding to a halt. Concerns about those reports from Germany and France are again raising concerns about a slowing global economy. All three of the major averages were trading lower. Optimism increased over the weekend as the U.S. and China referred to last week’s trade talks as “productive” and “constructive.” A higher-level round of talks is still scheduled to go ahead in October. Wall Street ended last week with losses, snapping a 3-week winning streak for the S&P 500 after reports emerged that Chinese officials canceled a planned trip to farms in Montana and Nebraska. The S&P 500 fell 0.5 percent, the Dow Jones Industrial Average dropped 0.6 percent and the Nasdaq lost 0.8 percent. In Asian trading on Monday, the Shanghai Composite index closed down 1.1 percent while Hong Kong’s Hang Seng ended the day down 0.8 percent after yet another weekend of violent protests. Tokyo’s markets were closed for holiday. Fosun Tourism Group, the biggest shareholder in Thomas Cook, fell 3.8 percent in Hong Kong after the 178-year-old British tour company collapsed. Bookings for more than 600,000 global vacationers were canceled Monday as a result. Shanghai-based Fosun International dropped 1 percent. Britain’s Civil Aviation Authority said Thomas Cook’s four airlines would be grounded and its 21,000 employees in 16 countries, including 9,000 in the UK, will lose their jobs. In Europe, London’s FTSE was off 0.2 percent, Germany’s DAX was down 1 percent and France’s CAC lost 0.7 percent.
MBA – commercial and multifamily mortgage delinquencies remain low in the second quarter of 2019
Commercial and multifamily mortgage delinquencies remained low in the second quarter of 2019, according to the Mortgage Bankers Association’s (MBA) latest Commercial/Multifamily Delinquency Report. “The strong economy, low interest rates, and liquid finance markets are all contributing to delinquency rates that are at or near record lows for commercial and multifamily mortgage loans,” said Jamie Woodwell, MBA’s Vice President of Commercial Research & Economics. “Despite uncertainty on many economic fronts, it is hard to identify factors that would dramatically change the delinquency rate picture in the near term.” MBA’s quarterly analysis looks at commercial/multifamily delinquency rates for five of the largest investor-groups: commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, Fannie Mae and Freddie Mac. Together, these groups hold more than 80 percent of commercial/multifamily mortgage debt outstanding. Based on the unpaid principal balance (UPB) of loans, delinquency rates for each group at the end of the second quarter were as follows:
– Banks and thrifts (90 or more days delinquent or in non-accrual): 0.46 percent, a decrease of 0.02 percentage points from the first quarter;
– Life company portfolios (60 or more days delinquent): 0.04 percent, unchanged from the first quarter;
– Fannie Mae (60 or more days delinquent): 0.05 percent, a decrease of 0.02 percentage points from the first quarter;
– Freddie Mac (60 or more days delinquent): 0.03 percent, unchanged from the first quarter; and
– CMBS (30 or more days delinquent or in REO): 2.46 percent, a decrease of 0.15 percentage points from the first quarter.
Latest Mac Pro to be made in Texas after securing tariff exemptions
Apple is boosting its commitment to the American workforce, part of a push to invest hundreds of billions into the U.S. economy. In a major announcement on Monday, Apple said it will build its redesigned Mac Pro in Austin, Texas. The move comes three days after U.S. trade officials approved exemptions that allow Apple to import key Mac Pro parts from China without them being subject to tariffs. “The Mac Pro is Apple’s most powerful computer ever and we’re proud to be building it in Austin,” Apple CEO Tim Cook said in a statement. “We thank the administration for their support enabling this opportunity.” The Wall Street Journal reported in June that Apple was moving Mac Pro production to China, but the tech giant said Monday that the high-powered computer would continue to be made in the Austin facility that has produced Mac Pros since 2013. One month after the Journal report, President Trump tweeted that the U.S. would not grant Apple tariff exemptions, saying, “Make [Mac Pros] in the USA, no Tariffs!” The Office of the U.S. Trade Representative said Friday it would grant tariff exemptions for partially assembled main circuit boards and graphics cards, which contain expensive chips from Intel, Nvidia and Advanced Micro Devices. Apple is using Intel’s Xeon processor in the new computer.
Apple rolled out the redesigned Mac Pro at its Worldwide Developers Conference in June, and it is expected to go on sale this fall. Production in Austin will begin soon, the company said. “We believe deeply in the power of American innovation,” Cook continued. “That’s why every Apple product is designed and engineered in the US, and made up of parts from 36 states, supporting 450,000 jobs with US suppliers, and we’re going to continue growing here.” Prices for the new Mac Pro start at $5,999. The computers tend to be used for music and video production. The announcement is more good news for Austin, which has the most Apple employees of any U.S. location outside its headquarters in Cupertino, California – 6,200 as of December 2018. The company said in December it is spending $1 billion on a new North Austin campus for 5,000 more employees, with the capacity to expand to 15,000 workers. “More than a dozen” U.S. companies in eight states — Arizona, Maine, New Mexico, New York, Oregon, Pennsylvania, Texas and Vermont — will supply Mac Pro components, according to Apple, and the value of U.S.-made parts is jumping 2.5 times compared to previous models.
At a dinner in August, Cook made a “very compelling argument” that U.S. tariffs on Chinese imports are hurting American companies like Apple, but not its South Korean competitor Samsung, Trump said at the time. A new round of tariffs will go into effect Oct. 15, and more tariffs will hit Dec. 15. Austin Mayor Steve Adler told FOX Business’ Stuart Varney that the city offered Apple no tax incentives. Texas Gov. Greg Abbott called the announcement “a testament to Texas’ unrivaled workforce and premier business climate.” “Apple’s latest investment is a testament to Texas’ unrivaled workforce and premier business climate.” “Our state’s economy is thriving as the tech and manufacturing sectors continue to expand,” Abbott said. “I am grateful for Apple’s commitment to creating jobs in Texas, and will continue to promote fiscal and regulatory policies that encourage investment in our state and benefit future generations of Texans.”
NAR – more than half say ‘now is a good time to buy,’ according to realtor® survey
New consumer findings from a National Association of Realtors® survey show that more than half of polled Americans believe that now is a good time to buy a home. Optimism fared well in the third quarter of 2019 as 63% of people said they believe that now is a good time for a home purchase, with 34% of those respondents saying they believe that strongly. NAR’s chief economist Lawrence Yun said the favorable outlook also contains a degree of caution. “Mortgage rates are at historically low levels, so I see no sign of the optimism about home buying fading,” he said. “However, the fact that slightly fewer are expressing strong intensity compared to recent prior quarters is implying some would-be buyers have concerns about the direction of the economy.” Among those that stated that now is a good time to purchase a home, the silent generation (those born between 1925 and 1945) were most likely to express that belief. Seventy-five percent from that demographic said that now is a good time to buy. They were closely followed by older boomers (those born between 1946 and 1954), as 72% from that age group agreed that now is a good time to purchase a home.
When NAR’s third quarter Housing Opportunities and Market Experience (HOME) survey1 asked whether now is a good time to purchase a home, of those who have an income under $50,000, 54% answered “yes.” Answers in the affirmative increased as household incomes increased. In the $50,000 to $100,000 bracket, 64% said now is a good time to buy a home, and among those polled who have an income of $100,000, 72% said that it is currently a good time to buy. “Not surprisingly, as incomes increase, the process of buying a home is less of a strain,” said Yun. “This has always been the case, but in this third quarter survey, we see it to an even greater extent – high earners are more open to buying a home.” The NAR survey also asked respondents about their thoughts on selling a home in the current market. Seventy-four percent of those polled said that now is a good time to sell a home – a modest increase over 73% last quarter. Of those respondents, 45% said they “strongly” believe now is a good time for selling a home, while the remaining 29% said they hold that belief “moderately.” Those in the West region were most likely to hold this sentiment, as 81% of the region’s respondents said “now is a good time to sell.” In comparison, in the Northeast, 67% said now is a good time to sell a home.
In regard to household income and thoughts on selling a home, the poll found that those in the higher wage brackets were more likely to state a belief in favor of now being a good time to sell a home. Among the surveyed who answered that now is a good time to sell, 82% of them earn more than $100,000. However, of those who earn less than $50,000, only 64% said now is a good time to sell. Respondents were also questioned about their outlook toward the U.S. economy. Fifty-two percent of those surveyed said they believe the U.S. economy is improving. This is a decrease from the second quarter of 2019, when 55% said they believed the economy is improving. Millennials (those born between 1980 and 1998) were the most pessimistic, only 49% said the economy is improving and 51% said it is not improving. Fifty-four percent of the silent generation – in this case, the most optimistic group – said the economy is improving. Forty percent of those in urban areas also believe the economy is improving, compared to 62% in rural areas.