Volatility Plus Uncertainty Equals Fools Abounding
The Mortgage Bankers Association says, like Gilda Radner used to, “Nevermind.”
They don’t say, we were wrong, we’re sorry. They say, we’re re-forecasting the year.
On The Big Picture blog, analyst Peter Boockvar offers this commentary. (We believe he’s inserted an unnecessary pair of quotation marks with his closing assertion.)
After the note I just sent on the Fed, the MBA said that after raising its forecast for mortgage originations by over $800b in March after the Fed’s QE plan and the subsequent decline in interest rates, they are cutting its ‘09 est by $700b. 88% of the cut is due to refi’s as the Fed “has not been successful in maintaining lower treasury yields.” In March when they raised their estimate they had this caveat, “with the billions in Treasury securities that would be issued to finance record budget deficits and with the Fed expected to purchase only a portion of those, how long rates stayed low would depend on whether other investors stayed in the market. If other investors shied away from Treasuries due to expectations of future inflation and the declining value of the $, the effect on rates would be more short-lived and our mortgage originations forecast would prove too optimistic.” “That has proven to be the case.”
Here’s CNBC’s Diana Olick reporting on the MBA reversal:
Here’s the question. If the threat of inflation is the cause for upward pressure on interest rates, why–with no reason to believe that at least wage inflation is in the offing–is there so much panic about imminent, momentum-crushing inflation?
We think the bigger concern to focus on is the weakness of the recovery itself, as Big Builder online editor Bill Gloede notes in his blog post today.
You know what? The MBA can reforecast again in three months and change it all back.
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[...] After the note I just sent on the Fed, the MBA said that after raising its forecast for mortgage originations by over $800b in March after the Fed’s QE plan and the subsequent decline in interest rates, they are cutting its ‘09 est by $700b. 88% of the cut is due to refi’s as the Fed “has not been successful in maintaining lower treasury yields.” In March when they raised their estimate they had this caveat, “with the billions in Treasury securities that would be issued to fRead more at http://www.housingcrisis.com/financial-crisis/volatility-uncertainty-equals-fools-abounding/ [...]