|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||8.94 - 9.15|
|52 Week Range||4.54 - 12.45|
|Beta (3Y Monthly)||2.17|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
Mortgage rates were on the rise as sentiment towards the U.S economy improved, supported by FED Chair Powell’s positive outlook.
The Federal Reserve is back to buying billions worth of mortgage bonds each month, but here’s why that doesn’t mean the central bank is stockpiling more of this type of debt on is balance sheet.
(Bloomberg) -- The change in stance by Fannie Mae and Freddie Mac’s regulator over whether the mortgage giants should be released from their conservatorships is “very bad” for common shares of the companies, Odeon Capital Group analyst Dick Bove wrote in a note.The Federal Housing Finance Agency is “no longer willing to argue that it will act alone to recap and release” the government-sponsored enterprises from their conservatorships, Bove said, citing recent remarks by FHFA Director Mark Calabria. “It may take three to four years to do this,” Bove said, which bodes poorly for common shares.“Recap and release” refers to the process of bolstering Fannie and Freddie’s ability to absorb losses and then returning them to private ownership. Calabria said that under his timeline, the companies could exit U.S. control by 2022 or 2023.Bove said that Calabria’s latest position was “totally different from the one he adopted last May,” when he warned that he wouldn’t wait for Congress to take action, and that he was “going to drive for the recap and release of the GSEs as soon as possible.” Now, Calabria has “repudiated” those views, Bove wrote, adding that it’s “hard to assume that the FHFA will be the champion that brings these companies back to the market.”Separately, Compass Point managing director for policy research Isaac Boltansky said in a note that there’s “growing apprehension given where we are in the presidential and economic cycles.” Boltansky wrote that Calabria’s recent remarks “reaffirmed that any GSE footprint reductions would be modest and tactical,” which makes the timeline more uncertain “given the combination of political, practical and economic factors.”Calabria has now clipped Fannie and Freddie’s “wings,” Height Capital Markets analyst Edwin Groshans wrote, adding that the regulator’s remarks “were not supportive of an early release from conservatorship for Fannie Mae and Freddie Mac.”Groshans doesn’t forecast that Fannie or Freddie will meet statutory capital requirements before the 2020 election, and said that if the Treasury’s position isn’t addressed before the election and a new administration takes over, a 10% dividend would be reinstated. That dividend “would be equal to or greater than the GSEs’ earnings, effectively preventing them from accreting capital and exiting conservatorship,” he said.Odeon’s Bove also said to “look for positive information” regarding preferred shares early next week. The Court of Federal Claims in Washington will hear oral arguments November 19 on the government’s motion to dismiss lawsuits by junior preferred and common shareholders challenging the so-called “net worth sweep” of profits.Bove said that his position has “always been that the common stock has little to no value and the preferred issues could be very attractive,” as investors should “trust the courts rather than the government bureaucracy.”Fannie common shares fell as much as 3% in Thursday trading while Freddie’s dropped as much as 2.8%.To contact the reporter on this story: Felice Maranz in New York at email@example.comTo contact the editors responsible for this story: Catherine Larkin at firstname.lastname@example.org, Scott SchnipperFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Fannie Mae and Freddie Mac’s regulator said the mortgage giants will likely be ready for public offerings by 2021 or 2022, a key step toward their exits from government control.Federal Housing Finance Agency Director Mark Calabria, speaking Wednesday at a housing finance policy conference in Washington, said he expects that his agency will have a rule dictating capital requirements in place before Fannie and Freddie go to market. He said they may face a period where they operate under a consent decree in which they technically exit conservatorship but aren’t free of the government’s grip.“If all goes well, 2021, 2022 we will see very large public offerings from these companies,” Calabria said at an event sponsored by the American Association of Residential Mortgage Regulators and the Conference of State Bank Supervisors. “The consent decree will be able to give that window where they can go to market, do an offering and still operate under a way where we’ve got some prudential safeguards.”Calabria said that under his timeline, the companies could exit U.S. control by 2022 or 2023.While Calabria has stressed his work is not “calendar-driven, but process-driven” the timeline he laid out may disappoint investors who were hoping that the companies would be freed sooner. It also means that prospects for housing-finance reform as envisioned by Trump administration appointees probably hinges on the president’s re-election next year. The Treasury Department is required to sign off on a number of changes to allow for Fannie and Freddie to exit conservatorship.Fannie fell 5% to $3.05 in New York trading Wednesday, while Freddie slipped 1.7% to $2.90. The shares were up before Calabria’s comments.Whether Fannie and Freddie can be freed under his timeline depends on market support for the move, Calabria said. He added that it’s up to the FHFA to set the benchmarks for freeing the companies, but up to them to meet those parameters.Calabria has previously said that while progress is being made on ending U.S. control, there is still a lot of work to be done. He has said the FHFA hopes to select a financial adviser soon to provide advice on an exit path, and that he also expects the companies to seek their own advisers.He said that he hopes to have an update on plans for setting Fannie and Freddie’s capital structure soon. He still hasn’t specified whether he plans to start from scratch or build upon the rulemaking initiated by his predecessor at FHFA.(Adds closing share prices in sixth paragraph.)To contact the reporter on this story: Elizabeth Dexheimer in Washington at email@example.comTo contact the editors responsible for this story: Jesse Westbrook at firstname.lastname@example.org, Gregory MottFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The 30-year fixed-rate mortgage averaged 3.69% during the week ending Nov. 7, down three basis points from the previous week, Freddie Mac (FMCC) reported Thursday. The rate on the 30-year mortgage is over a full percentage point lower than it was at this same time a year ago, when rates averaged 4.94%. “After a year-long slide, mortgage rates hit a cycle low in September 2019 and have risen in six out of the last nine weeks due to modestly better economic data and trade related optimism,” Sam Khater, Freddie Mac’s chief economist, said in the report.
Housing finance giant Freddie Mac has hired management consultancy McKinsey & Company to advise on capital management, a spokesman said Thursday, as Freddie and its regulator start the long process of overhauling the firm and ultimately removing it from government control. "After a competitive ... process, Freddie Mac retained McKinsey to conduct a gap assessment of our capital management capabilities and develop a roadmap to address any issues.
(Bloomberg Opinion) -- Millennials spend a lot of time bemoaning their inability to buy a home, forcing them to keep renting. They should want to stay renters, if they know what’s good for them financially.It’s generally believed that appreciation in home values is what created middle-class wealth in earlier decades. But that was only because monthly loan payments forced homeowners to save and eventually retire their mortgage debt. Most of the rise in single-family house prices over time is due to larger new structures with more marble bathrooms, fancier kitchens, etc. The quality-adjusted house price index, developed by Prof. Robert Shiller of Yale University, removes this upward price bias by comparing the prices of the same house when it is sold repeatedly over time. It shows that average quality-adjusted single-family house prices, corrected for overall inflation, have risen a paltry 1.1% at a compound annual rate since 1972. The reason the results have an upward bias at all is that they don’t adjust for interim owners doing upgrades.But then there’s the mortgage rate offset. Since 1972, 30-year fixed-rate mortgage rates in real terms have averaged 4.1%, meaning it has cost the homeowner 3% per year to own a house before taxes, maintenance, utilities and insurance. That’s a real negative return. No wonder only about a third of millennials owned their homes in 2016, compared to half of Generation X at a similar age in 2001 and half of Baby Boomers in 1989. The homeownership rate for people under 35 has declined by 7.2 percentage points from a peak of 43.6% in mid-2004 to 36.4% in mid-2019, steeper than the 5.1-percentage point drop from 69.2 to 64.1 in the total rate.To be sure, millennials do face financial strains not encountered by previous generations. According to Federal Reserve data, Millennial households in 2016 had an average net worth of $92,000, or 40% less than Generation Xs at the same age and 20% less than Baby Boomers in 1989. Many millennials, born between 1980 and 1996, entered the workforce during the Great Recession or shortly after at low pay, and history suggests they’ll never catch up. When the unemployment rate jumps five percentage points, as it did then, cumulative earnings fall by 10% over the first decade of a new employee’s career.Some millennials were caught up in the subprime mortgage boom and collapse, and remain scarred by it. They believed they could buy houses with no money down and never shell out a dime because continuing rapid appreciation would allow for continual refinancings. So the bursting of the subprime mortgage bubble and subsequent one-third decline in house prices was a rude awakening, especially since it was the first nationwide drop in values since the 1930s.In the aftermath, mortgage lending standards have been dramatically tightened and millennium incomes and net worth growth weak. So by choice or necessity, many millennials are renters. Since the housing collapse, multi-family housing starts, mostly rental apartments, have surged past their previous 300,000 annual rate level to 340,000 in September. But single-family starts, after nosediving from a 1.82 million annual rate in January 2006 to 350,000 in March 2009, have only revived to 920,000, well below the long-term average of 1.2 million. Also, investors have bought huge quantities of single-family houses and converted them to rental units. Last year, investors bought 20% of houses in the lowest one-third price range, up from the 15% average. These are abodes that first-time home buyers normally purchase.Many millennials are accepting their fate. A new Freddie Mac survey found 24% of renters “extremely” unlikely to ever own a house, four percentage points lower than four years ago. Some 82% said renting is cheaper than buying, 15 percentage points higher than in February 2018 even though at $1,008 a month average as of the second quarter, rents nationally risen 20% faster than inflation between 1980 and 2016.The trend toward renting over owning should persist and may even increase. I continue to favor investments in rental apartments—assuming, of course, they meet the location, location, location test.To contact the author of this story: Gary Shilling at email@example.comTo contact the editor responsible for this story: Robert Burgess at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.A. Gary Shilling is president of A. Gary Shilling & Co., a New Jersey consultancy, a Registered Investment Advisor and author of “The Age of Deleveraging: Investment Strategies for a Decade of Slow Growth and Deflation.” Some portfolios he manages invest in currencies and commodities. For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Mortgage rates saw further upside in the week as the U.S and China made progress on trade. Expect geopolitics to have more influence in the week ahead.
Mortgage rates rose yet again — illustrating how the Federal Reserve’s policy can have a somewhat limited effect on the mortgage market. The 30-year fixed-rate mortgage averaged 3.78% during the week ending Oct. 31, up three basis points from the previous week, Freddie Mac (FMCC) reported Thursday. The 15-year fixed-rate mortgage increased one basis point to an average of 3.19%, according to Freddie Mac.
Mortgage rates rose yet again—illustrating how the Federal Reserve’s policy can have a somewhat limited effect on the mortgage market. The 30-year fixed-rate mortgage averaged 3.78% during the week ending Oct. 31, up three basis points from the previous week, (FMCC) (FMCC) reported Thursday. Read more: The Fed Is Feeling Cheery.
The U.S. Securities and Exchange Commission (SEC) on Wednesday said it was seeking feedback on whether disclosure rules were discouraging firms from issuing SEC-registered residential mortgage-backed securities (RMBS) as the Trump administration seeks to overhaul the U.S. housing finance market. The move, which follows five years of limited activity in the SEC-registered RMBS market, could result in the SEC loosening disclosure requirements introduced in the wake of the 2007-2009 subprime mortgage crisis. SEC Chairman Jay Clayton said that he had asked agency officials to review SEC disclosure requirements for RMBS introduced in 2014 in a bid to revitalize offerings for these products and help boost capital formation in the housing market.
(Bloomberg) -- The Trump administration asked the U.S. Supreme Court to toss out a lawsuit by Fannie Mae and Freddie Mac investors that challenged the federal government’s hoarding of nearly all the mortgage giant’s profits.In an appeal filed late last week, Justice Department lawyers said a federal appeals court was wrong when it ruled in September that the investors’ lawsuit should go forward. The shareholders’ suit claims the Treasury Department and the Federal Housing Finance Agency exceeded their authority by taking all of Fannie and Freddie’s earnings. The FHFA is the companies’ regulator.The lower court ruling has “significant financial implications for the federal government, the enterprises and market participants,” the Justice Department argued in its petition to the Supreme Court.The Trump administration contends the 2008 law that set up the FHFA precludes lawsuits that challenge the profit sweep. Fannie and Freddie were put under federal control later that year as the housing market cratered, and ultimately received a $191 billion taxpayer rescue. The companies have since returned to profitability and have paid more than $300 billion in dividends to the Treasury.The controversial decision to hoard Fannie and Freddie profits was made by the Obama administration in 2012. Hedge funds and other shareholders have been fighting to overturn the sweep for years.The investors previously filed their own appeal asking the Supreme Court to intervene. They argue that the structure of the FHFA is unconstitutional because its director can be fired by the president only for limited reasons.The new case is Mnuchin v. Collins, 19-563.To contact the reporter on this story: Greg Stohr in Washington at email@example.comTo contact the editors responsible for this story: Joe Sobczyk at firstname.lastname@example.org, Jesse Westbrook, John HarneyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
U.S mortgage rates were on the rise, as abating geopolitical risk and positive corporate earnings supported yields. It could be a choppy week ahead, however.
Mortgage rates increased for the third straight week — but still remain very low compared to a year ago. The 30-year fixed-rate mortgage averaged 3.75% during the week ending Oct. 24, up six basis points from the previous week, Freddie Mac (FMCC) reported Thursday. The 15-year fixed-rate mortgage increased three basis points to an average of 3.18%, according to Freddie Mac.
(Bloomberg) -- Fannie Mae and Freddie Mac’s regulator, facing scrutiny from Democrats about whether freeing the companies from U.S. control might enrich hedge funds, said he would be willing to wipe out shareholders of the mortgage giants if circumstances called for it.“I work for the taxpayers,” Federal Housing Finance Agency Director Mark Calabria said Tuesday at a House Financial Services Committee hearing on the Trump administration’s proposal for releasing the companies.Calabria was responding to heated questions from Representative Bill Foster, an Illinois Democrat, about whether hedge funds including Paulson & Co. stood to reap windfalls under the plan released by the Treasury Department last month. Calabria said that while it isn’t his objective to wipe out or enrich shareholders, he will do what’s needed to ensure taxpayers don’t have to bail out the companies again.Billionaire John Paulson’s firm is among a group of hedge funds that have been fighting for years to end the net-worth sweep that sends Fannie and Freddie profits to the Treasury. Shares have rallied this past year on optimism that the Trump administration will move to end that policy.Fannie fell 3.1% to $3.39 as of 1:54 pm in New York Trading Tuesday, while Freddie dipped 2.9% to $3.18.Read More: Fannie and Freddie Died But Were Reborn ProfitablyFannie and Freddie have been under U.S. conservatorship since 2008, when they were seized as the mortgage market imploded. Treasury’s proposal suggests dozens of reforms to protect against another housing crash, shrinking their dominant market shares and creating new competitors to the two companies, which backstop about $5 trillion of home loans.Foster said that he would like to see shareholders of Fannie and Freddie wiped out, though as a politician he doesn’t have that power. Calabria noted that it was his view when he worked on Capitol Hill in the wake of the 2008 financial crisis that the companies’ investors should lose everything.Democratic lawmakers such as Foster have insinuated that Treasury’s blueprint for overhauling Fannie and Freddie could be a boon for hedge funds that undermines access to affordable housing for lower-income buyers.Democrats are concerned because Treasury and FHFA could theoretically bypass Congress to let Fannie and Freddie build up their capital buffers and then release the companies from federal control. Such a process, known as recap and release, would likely enrich preferred shareholders including Paulson.Read More: Trump Fannie-Freddie Plan Urges Ending Decade of U.S. ControlTreasury Secretary Steven Mnuchin reiterated Tuesday that it’s “by far” his preference to work with Congress on an overhaul of Fannie and Freddie. Mnuchin and Calabria both said during the hearing that no decision has been made on how exactly Fannie and Freddie might be released.Mnuchin said that all options, including putting Fannie and Freddie through a process called receivership that is akin to bankruptcy, is still on the table. Receivership is potentially a bad outcome for shareholders because it could wipe them out.Calabria wouldn’t commit to supporting recap and release, adding that he opposes releasing Fannie and Freddie if they end up operating in the same way as they did before the 2008 crisis. As part of the administration’s blueprint, Treasury and the FHFA are required to come up with a plan for how the mortgage giants will raise outside capital, and whether that will entail a new share sale, for example.Democrats are increasingly raising questions about whether Fannie and Freddie investors have undue influence on the Trump administration. Representative Alexandria Ocasio-Cortez, a progressive who’s a vocal critic of the financial industry, asked whether Mnuchin stands to make money if the companies are freed from federal control. Mnuchin, who was once an investor in Paulson’s hedge fund, said he would not profit because he’s divested assets since joining the government.Paulson has been a fundraiser for President Donald Trump and has a long history with Mnuchin. In 2008, Paulson and Mnuchin joined forces to invest in troubled mortgage lender OneWest, a deal that proved lucrative for both of them.(Adds comment from Acasio-Cortez in 13th paragraph.)\--With assistance from Kasia Klimasinska.To contact the reporter on this story: Elizabeth Dexheimer in Washington at email@example.comTo contact the editors responsible for this story: Jesse Westbrook at firstname.lastname@example.org, Gregory MottFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
A British tobacco company, Dutch paint company, California-based dermatological company, and Maryland-based regional bank were among the securities that experienced the largest trading volume increases ...
While the decline in rates has prompted many home owners to refinance their loans, it may not be enough to create a major uptick in home-buying activity
Mortgage rates were on the slide, according to Freddie Mac, with a combination of lower rates and a strong labor market supporting mortgage applications.
While the decline in rates has prompted many home owners to refinance their loans, it may not be enough to create a major uptick in home-buying activity.
Economists argue that low rates will continue to prop up the housing market as the economy slows down, but it’s not clear how long that will last.