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Market News

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MADISON, Wis. (1/10/13)

  • With 11 months of data reported, 2012 will go down as a record year for favorable housing affordability conditions and a great year for buyers who could get a mortgage, according to the National Association of Realtors (NAR). NAR's national Housing Affordability Index stood at 198.2 in November, based on the relationship between median home price, median family income and average mortgage interest rate. The higher the index, the greater the household purchasing power. An index of 100 is defined as the point where a median-income household has exactly enough income to qualify for the purchase of a median-priced existing single-family home, assuming a 20% down payment and 25% of gross income devoted to mortgage principal and interest payments. For first-time buyers making small down payments, the affordability levels are lower. For all of 2012, NAR projects the housing affordability index to be a record 194, up from 186 in 2011, which was the previous record. November's reading was 2.5 index points below October, but up 1.5 index points from a year earlier. For the NAR release, use the link …
  • U.S. mortgage loan application volume increased 1.7% for the week ended Jan. 4 from one week earlier, according to the Mortgage Bankers Association (MBA) Market Composite Index. The index is part of  MBA's Weekly Mortgage Applications Survey released Wednesday. On an unadjusted basis, the index rose 49%. The Refinance Index increased 12% and is up less than 1% from two weeks ago, the week before the holidays. The seasonally adjusted Purchase Index grew 10%, down 2% from two weeks ago. The unadjusted Purchase Index went up 49% and was 8% lower than the same week one year ago. The refinance share of mortgage activity remained constant at 82% of total applications. Adjustable-rate mortgage activity was unchanged, at 3% of total applications. The Home Affordable Refinance Program share of refinance applications decreased to 25% from 27% the prior week. For the MBA report, use the link

News of the Competition

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MADISON, Wis. (1/10/13)

  • The volume of U.S. collateralized loan obligations (CLOs) quadrupled last year, reaching $55.2 billion (American Banker Jan. 8). In 2013, analysts are forecasting issuances of $60 billion to $70 billion--which would push CLOs nearer to the $92.8 billion peak reached in 2007, the Banker said. Banks are interested in that market's performance because they invest in and market CLOs, while CLOs also invest in bank-syndicated loans. After the CLO market started to recover from the financial crisis, it struggled with a narrow investor base, the publication said. After some new potential investors--foundations and endowments, public pensions and regional banks--in 2011 began looking at the market, the CLO investor base substantially widened in 2012, the Banker said …
  • Morgan Stanley intends to slash 1,600 jobs in the nest five weeks. The job cuts will be in its institutional securities business--roughly 6% of its investment banking and trading unit and support staff, according to a source familiar with the matter (The Wall Street Journal and Bloomberg.com Jan. 9). The layoffs will concentrate on senior employees, with half the cuts occurring in the U.S. and half abroad. The sixth-biggest U.S. bank by assets intends to tell employees about the cuts during the next few weeks, the source said …