Will Fannie and Freddie (FHFA) go back to being private companies? Established 17 years ago with the Housing and Economic Recovery act of 2008, Fannie and Freddie were put into government conservatorship (essentially bankruptcy) which no longer allowed them to retain profits. The government also guarantees these mortgages, which make them attractive for large secondary market investors (such as life insurance and pension funds) because there is very little risk. Some worry that privatizing would be a big payout for investors and put the Mortgage market at risk, but President Trump says that the US government will still oversee FHFA and maintain is guarantee.
Mortgage Rates – improved nicely this week after 3 consecutive weeks of pain. Rates are 0.25% better than this time last year.
Home Values – the Case-Shiller Index reported that prices declined 0.3% in March at a seasonally adjusted basis (raw figure was a 0.8% increase). Generally March sees a bump in prices. Year over year prices rose 3.4%, a moderation from the previous figure of 4%.
Inflation – the Personal Consumption Expenditures (PCE) Index showed that personal spending rose 0.2%. The headline inflation number rose 0.1% and is up 2.1% year over year. The core rate, which strips out food and energy, declined from 2.7% to 2.5% on a year over year basis. This was favorable towards Mortgaged-Backed Securities (MBS)
Rents – Apartment List’s National Rent Report showed that new rents improved 0.4% in May and are down 0.5% year over year. This time of year, normally sees a bump in rates but the vacancy rates remain unchanged at a 7% clip.
Mortgage Applications to purchase homes rose 2% last week and are up 18% year over year. Refinance applications declined 7% but are up 37% year over year. Refinance applications comprise 36% of applications.