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Mortgage Refinancing Jumps

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mortgage applicationYesterday was yet another with a dearth of economic numbers. However, we did have one piece of economic data. MBA Mortgage Applications rose 0.9% versus a prior 3.6%. The increase in mortgage applications was due to refinancing activity. The mortgage refinancing gauge jumped 3.8% to the highest level since the week ended March 14. The purchase-applications measure fell 2.8%. Since the yield of the 10-year Treasury note broke below 2.70%, refinancing activity and home purchase activity have experienced role reversal. This has occurred because mortgage rates are now low enough to enable more homeowners to refinance mortgages and because the supply of affordable homes has dwindled.

Although the housing sector should not be a drag on the economy, it might not provide much in the way of economic thrust.

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This time around, housing will probably need thrust provided by the broader economy. One problem in housing which appears to be suppressing sales is that many affordably-priced homes cannot be sold because homeowners are upside down. I.E. They owe more than the home is worth. On the other side of the housing problem are potential home buyers who cannot afford to purchase a home at prices which would solve the upside down problem among current homeowners. Until homeowners pay down their mortgages or potential homebuyers see incomes rise, housing could be stuck in the mud. Meanwhile, demographic changes (slower population growth) have resulted in slower growth or prospective homeowners. house-made-of-dollars-ssAn aging population has engendered a trend of home downsizing. Older Americans are selling or renting-out the homes in which they raised families and are moving into smaller homes, condominiums, etc. On the opposite end of the spectrum, younger adults are choosing urban housing units (often filled with amenities) over larger private homes for both economic and cultural reasons. Then there is a growing segment of young adults (aged 18 to 35) that are living with parents for economic reasons (large sums of student debt and low-wage jobs). We just don’t see how housing can lead the economy to greater heights. However, a stronger economy could lead housing back (to some extent).

By Thomas Byrne – Director of Fixed Income – Investment Consultant thomas bryne Thomas Byrne brings 26 years of financial services experience to Wealth Strategies & Management LLC. He spent the last 23 years as Director of Taxable Fixed Income for Citigroup, Inc. and predecessor firms in New York, NY. During the course of his long fixed income career, Mr. Byrne was responsible for trading preferred stock, corporate bonds, mortgage backed securities, government debt, international debt and convertible bonds. Mr. Byrne was also responsible for marketing, sales, strategy and market commentary within the taxable fixed income markets. Employment

  • November 2012 – Present, Wealth Strategies & Management LLC, Stroudsburg PA
  • December 2011 – November 2012 – Bond Squad, Kunkletown, PA
  • April 1988 – December 2011, Citigroup and predecessor firms, New York, NY
  • June 1986 – March 1988 – E.F. Hutton, New York, NY

Thomas Byrne

Director of Fixed Income
Wealth Strategies & Management LLC
570-424-1555 Office
570-234-6350 Cell
Twitter: @Bond_Squad
High yield/junk bonds (grade BB or below) are not investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.“Bond Squad is my favorite bond investing newsletter. It combines common sense with deep market knowledge.”
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Thomas Byrne

Thomas Byrne serves ad the Director of Fixed Income for Wealth Strategies Management LLC. Thomas brings 26 years of financial services experience to Wealth Strategies & Management LLC. He spent the last 23 years as Director of Taxable Fixed Income for Citigroup, Inc. and predecessor firms in New York, NY. During the course of his long fixed income career, Mr. Byrne was responsible for trading preferred stock, corporate bonds, mortgage backed securities, government debt, international debt and convertible bonds. Mr. Byrne was also responsible for marketing, sales, strategy and market commentary within the taxable fixed income markets. High yield/junk bonds (grade BB or below) are not investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

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