About QEternity's Mortgage-Based Housing Boost?

Tyler Durden's picture

We know its 'early' and we should not be judging yet another QE-book by its front-running cover; but the following three charts might give all those hopeful that this time its different some pause for thought on the Fed's actions being anything other than by the banks, for the banks, and of the banks. With refi activity's burst fading, retail mortgage rates having not budged, residential delinquencies rising once again, and average 'approved mortgage loan' FICO score at 750, it would seem the Fed could throw another cajillion dollars at the banks and reserves would just inflate further (along with everything we eat, use, and need), leaving the economy muddling through at best.


Since QEternity was announced, retail mortgage rates have dropped a mere 12bps to 3.39% while wholesale rates are down 30bps (and considerably more at one point)...


and while there was an immediate knee-jerk reaction to refi (no doubt driven by a massive marketing push from the servicers), it is now fading...


Is it any wonder it is fading... Average accepted mortgage loan FICO Scores are 750...


and Resi Delinquencies are rising once again...



In a nutshell: - QEternity is FOR the 'banks'; As far as the 'people', those who can (refi) have, those who can't won't!

Charts: JPMorgan and Bloomberg

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Seasmoke's picture


Americanius's picture

Exactly!  I started deleveraging in 2008.  Now only have a mortgage. Was looking at refi but I'm applying my deleverage dollars to the mortgage and will be free from the bank in 5 years. But never really free because of endless property taxes.  Nebraska was so stupid for not eliminating property tax.  They showed the state they would gladly put their own chains on.

fonzannoon's picture

A few of my buddies recently got their loans streamlined. They had to be FHA loans and they had to be written by some random month in 2009. My loan was a conventional loan because I saved my f'n ass off like a dimwit for 15 years to get a 20% downpayment. So I don't qualify for a refi. Eat my ass Bernanke.

Robslob's picture


Oh yeah, and thanks for the super-jumbo refi on a 15 year at 2.875%.

fbrothers's picture

The refinance program is a myth. If your borrower is not paying a $2,000. a month payment, and can afford to, he will certainly not pay a $1,000. payment. It is just his character. This is a fact. The banks do not want to write down their losses. Which is just plain poor banking. There is still a ton of real estate out there, that needs to be foreclosed, they should not be on the books. They are like the individual going bankrupt. Hoping tomorrow there will be a bucket of cash on his front door, when he wakes up. Sooner or later these stupid loans, yes student loans too, need to be charged off. The government needs to get out of the lending business. Yes, Fannie Mae too. They have no idea how to make a profit in the lending business. 


DanDaley's picture

The govt. could not care less about making a profit...after all, it's not their money.  It's all about control, rewarding their friends, and punishing their enemies. Not so hard to figure out.

Vi Veri Veniversum Vivus Vici's picture

So When is the right time to buy a house in your collective opinions?  The next year or so . . . or wait for it all to collapse and save PM's for moment?  I'm looking to find a permanent home for my family before I die!

LawsofPhysics's picture

Depending the purpose (is this for a rental a business or your own home) and the location I would lean towards buying in the next four months, if for nothing other than taking possession of another physical asset. There are certain locations/applications that just hold their value. My two cents.

tired_of_manipulation's picture

If a house is something that you value, it may or may not be the best time right now but it's certainly not the worst time anymore like 2006.   

Oracle of Kypseli's picture

If you are not planning to ever move, buy this winter. The mortgage rates are actually negative. Buy exactly the size you need and not larger.

LawsofPhysics's picture

Mark to market? Have several properties. Saved, had 20% to put down, well, least they are generating income because the equity isn't what it used to be. Fuck you Bernanke.

max2205's picture


ItsDanger's picture

Want to stimulate the economy?  Stop giving to banks and pay off consumer's debt.  Might actually have a longer shelf-life than these QE tranches.

max2205's picture

Fed chief rounds on stimulus critics

Ben Bernanke has launched a staunch defence of the US central bank’s aggressive monetary easing amid attacks on the policy from officials around the world.

The head of the Federal Reserve rounded on critics of the policy, which has prompted accusations that he has sparked a global “currency war” that risks destabilising emerging market economies.

The Fed’s effort “not only helps strengthen the US economic recovery, but by boosting US spending and growth it has the effect of helping support the global economy as well”, Mr Bernanke said on the last day of International Monetary Fund annual meetings in Tokyo on Sunday.

“It is not at all clear that accommodative policies in advanced economies impose net costs on emerging market economies,” he added.

The Fed has faced a barrage of criticism over its decision to expand its balance sheet by a potentially unlimited amount in an attempt to counter high unemployment in the US. Opponents contend that the Fed’s third round of quantitative easing – nicknamed QE3 – has triggered volatile capital inflows into emerging markets, leading to an appreciation of their exchange rates, weighing on trade, and creating threats to financial stability.

Guido Mantega, Brazil’s finance minister and one of the Fed’s most vociferous critics, on Saturday labelled the Fed’s ultra-loose monetary policy as “selfish”.

Mr Bernanke expressed sympathy for these concerns, but said any costs for emerging economies should be weighed against the “very real benefits” of monetary easing by the Fed and other advanced economy central banks. He also said the link between ultra-loose monetary policy and international capital flows was “looser than is sometimes asserted”.

Both the Fed and the Bank of Japan have eased monetary policy in recent months. But Mr Bernanke’s counterpart at the BoJ, Masaaki Shirakawa, appeared far more concerned about the detrimental impact of easing on emerging markets.

Mr Shirakawa warned over the weekend of the “collateral damage” caused by an abundance of easy credit from developed markets to the rest of the world. “With the deepening of globalisation, no responsible policymaker could now dismiss the cross-border spillovers and feedbacks of their policies,” he said.

The BoJ chief called on officials in advanced economies to be more patient. He noted that despite “aggressive” and unconventional monetary policy, the growth trajectory of Europe and the US in the four years following the Lehman crisis had been lower than that of Japan following the bursting of its asset bubbles at the end of the 1980s.

“We have to accept that the growth rate may have to be lower” until excess debt is worked off, Mr Shirakawa said. “Unless we come to terms with this fact, recovery could be endangered by the adoption of inopportune and inappropriate policies, driven by discontent among the general public, that could erode efficiency and destabilise the global economy.”

Christine Lagarde, managing directorof the IMF, indicated that the IMF could relax its position against capital controls to take into account the impact of ultra-loose monetary policy in advanced economies, which she acknowledged was likely to spur large and volatile capital flows to emerging economies.

“We have been working on refining our institutional view on the liberalisation and management of capital flows from the perspective of countries that receive and those that generate capital flows,” she said on Sunday.

The BoJ governor also warned that it could pave the way for the next financial crisis. The current “global easing bias,” he said, “may have parallels with the environment that gave rise to the great credit bubble of the 2000s.”

The Fed and other advanced economy central banks have faced criticism from emerging markets for their policies.

The Fed has also come under attack closer to home. Some lawmakers in Congress have criticised the central bank’s response to the crisis, saying that it has strayed beyond its mandate and that its policies could provoke high inflation. In contrast, the BoJ has often found itself under pressure from lawmakers in Tokyo to step up its response to the country’s economic woes.

treasurefish's picture

750 is the average FICO for approved mortgages in 2012?  LOL!  We quit paying ALL of our credit cards in May 2008 (like $28k).  Our FICO dipped to a low of 540, but was back up to the minimum threshold of 620 this year to get another mortgage, and we just bought a brand new, 3,500 sq ft house out in the country (w/ acreage) - and renting out our "old" (4 yr old) house at a profit.  Just In Time for the all time low interest rate of 3.5%.  I don't know if I'm just lucky or smart, but the banks are neither!  They just keep coming back for more pain - which I mercilessly inflict on their debt addiction.  Poor bastards never learn.  God Bless America.  Love it!!!

ItsDanger's picture

Perhaps Bernank has already purchased that mortage from your bank.  Therefore, you the taxpayer own it.

treasurefish's picture

Well, that would mean it's now socialized, because you would own it too.  Got cold beer in the fridge....you bring the girls.

Go Tribe's picture

Is it really as easy as shorting the home holders now?

Downtoolong's picture

Fed's actions being anything other than by the banks, for the banks, and of the banks.


Why would anyone ever think anything else?


When you really think about it, the notion that the Fed is now involved in public stimulus policy is the perfect new banking scam. It gets everyone’s attention diverted and arguing over something the TBTF Bankster’s don’t care about anyway.


If by some miracle the economy recovers in spite of them, they can tell all the naysayers, see we told you it would work, and Wall Street still gets rich.


If, as expected, it fails to stimulate the housing market and economy, they can always blame Europe, China, or the fact that they didn’t do enough stimulus, and Wall Street still gets rich.


Notice the common thread in the two scenarios.


The best part is, they don’t even have to deal with those pain in the ass clients in the private sector anymore. They can just work the public sector to do their bidding for them, which is sooo much easier.


This is how these MF’s think and behave now.



goldenbuddha454's picture

Without Libor manipulation and a fading QE3 stimulation how are banks going to make money?  In the Bernankesphere anything is possible.  But wait, maybe even the FED can be sued if the libor suit goes through.  Should be interesting.  http://www.cnbc.com/id/49412365