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New products could increase the number of investors shorting U.S. home loans

Livinglies's Weblog

A sluggish mortgage-bond market could be jump-started by a new service that allows investors to short home loans.

Skeptics say the rise of derivatives on credit-risk transfer notes sold by Fannie Mae and Freddie Mac has echoes of the 2008 credit crisis, when the market plunged under the weight of collapsing subprime securities.

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Faux Housing Recovery: US Mortgage Applications Tumble Most Since 2016

Livinglies's Weblog

After dismal housing starts and permits data yesterday, the ‘housing recovery’ narrative took another knock this morning as mortgage applications tumbled 4.1% last week – the biggest drop since December 2016.  If the Fed raises rates in June- there will be a further contraction.

While mortgage rates were unchanged, both purchases and refis fell notably…

  • Purchases down 2.7% after rising 1.7% in prior week
  • Refis fell 5.7% after rising 3.3% in prior week

Perhaps additionally of note the government’s programs saw a dramatic drop off in the last week…

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