California is home to approximately 39 million residents, which is about one-eighth of the U.S. population, more than the entire population of Canada, and accounts for 20-25 percent of residential loan production. Most California's residents belong to ethnic minority groups; in fact, one out of every four Californians was not born in the U.S. Here in Northern California a fair number of people are in real estate and lending, so predictions about the Federal Reserve are of great interest. Primary dealer banks have pushed back their predictions on when the Federal Reserve will end its quantitative tightening process to the fourth quarter, according to a survey by the Federal Reserve Bank of New York. On that timeline, the Fed's balance sheet would shrink from the current $7.764 trillion to $6.75 trillion… through securities maturing, mortgage loans paying off early, or the Fed selling those securities. The market expects this, which is a good thing. (Today’s
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Our Federal Reserve doesn’t control events around the world, like a ship being stuck in the Suez Canal, or the current Red Sea geopolitical aggression, which can impact our inflation rate or how much money companies or individuals earn. The world changes. What was it like going to a concert 60 years ago? This will give you an idea. Concerts have become huge moneymakers. Along those lines, but in a different industry, the Financial Times reports that JPMorgan took almost a fifth of total US bank profits in the first nine months of 2023! Too big to fail? For those playing along at home, the ten largest banks, when that concert was filmed, were Bank of America, Chase Manhattan Bank, First National City Bank of New York, Chemical Bank New York Trust Company, Morgan Guaranty Trust Company, Manufacturer’s Hanover Trust Company, Bank of California, Security First National Bank, Banker’s Trust Company, and First National Bank of Chicago. Now the list is JPMorgan Chase, Ban
Here in Chicago, there are several restaurants that are “the place” to have afternoon tea. Tomorrow is the 250th anniversary of the Boston Tea Party. (And no, I was not working on a trading desk slinging MBS back then.) In those days, news traveled via word of mouth, rare newspapers, sermons, personal letters, or broadsides. People had time to think about things and contemplate. Nowadays, there are plenty of places from which to glean financial news. Unfortunately, the press is not one for putting good news in the headlines, and Navy Fed finds itself in the crosshairs of CNN breaking news of data on black and white borrower approval rates. Can regulators be far behind on this one? Industry vet Brian B. asks, “How much wealth was not created for minorities because of these actions? How did they treat other groups, i.e., single females, or Hispanics?” Lenders everywhere are interested in passing more costs on to borrowers regardless of race, and if so which co
“What do you call James Bond having a bath? Bubble 07.” In different bond matters, mortgage rates will always be higher than Treasury rates, in part because of the prepayment risk in mortgages that doesn’t exist with Treasury bonds. With the drop in rates, sales management personnel at lenders are busy figuring out how best to remind the staff about EPO (early payoff) penalties levied by investors while at the same time working on ways to save money besides furloughing, cutting staff, outsourcing, and re-doing vendor contracts. The recent decline in rates and increase in applications is welcome: According to Curinos, November 2023 funded mortgage volume decreased 11 percent YoY and 10 percent MoM. In the Retail channel, funded volume was down 22 percent YoY and 10% MoM. The average 30-year conforming retail funded rate in November was 7.45 percent, 25bps higher than October and 85bps higher than the same month last year. (Curinos sources a statistically significant
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