The mortgage market continues transform before our eyes. The list of subprime/Alt A business unit that exits growing with the addition of EquiFirst, First National Bank of Arizona third party origination, Group One’s wholesale business, Allstate and Transnational). Indy Mac provided some leadership and hired over 600 people from American Home Mortgage signaling to the market that they are here to stay in the Top 10 well into the future. Loan applications edged down 4.0% on a seasonally adjusted basis (Mortgage Bankers Association) which was not a surprise given the tightening market conditions. The independent mortgage banker continues to get squeezed by very cautious warehouse lenders closely monitoring their exposure while commercial banks continue to pick up personnel from closed mortgage operations.
On a positive note, Ginnie Mae lifted the loan limits to improve the liquidity in the market. This is a very positive sign and MarketWise continues to expect similar moves from Fannie Mae and Freddie Mac that will help mitigate the fundamental issues surrounding mortgage liquidity of non-conforming prime origination. According to Freddie Mac, long term mortgage rates also edged down 7bps in the last week which should help maintain the level of refinancing activity. In the midst of the optimism of the Federal Reserve potentially cutting interest rates, mortgage stocks which plunged early in the week on rallied to recover with investors seeking bargains.
While the sub-prime market continues to unravel, the prime lenders are seeking safe ground and investors are starting to make moves to come back into the market. One thing is very clear, however, the basic ground rules of mortgage lending are back in the mortgage industry—lending based on credit, character and capacity.
MarketWise Advisors, LLC.
1-800-815-9484 (main)
www.marketwiseadvisors.com
Comments
Post new comment