Friday December 23 2016 Housing and Economic stories

TOP STORIES:

How Will Homebuyers Swallow these Mortgage Rates?  - (www.wolfstreet.com) Many of them say they won’t. And they can’t. It’s called sticker shock: you look at something that you very rarely buy, and when you see how much it would set you back, you go into shock. This is what is happening with mortgage rates when potential homebuyers figure how much the monthly payment would be for a given house. On Friday, lenders quoted conventional 30-year fixed-rate mortgages between 4.375% and 4.5% for prime borrowers. While that’s still historically low, it’s up well over half a percentage point over the last four weeks, the highest since April 2014, and up over a full percentage point from many low points during this period. Home prices have soared in recent years, in part due to historically low mortgage rates. But today’s higher mortgage rates make those homes a lot more expensive in terms of the monthly payment, at a time when home “affordability” in many cities is already a huge issue for what remains of the middle class.

TrimTabs Issues Warning After A Record $98 Billion Flood Equity ETF Since The Election - (www.zerohedge.com) Having recently (before the election) found that stock buybacks have tumbled to the lowest level in 5 years, coupled with the lowest amount of insider buying since 2011, this morning TrimTabs Investment Research reported what regular readers already know, namely that U.S. equity exchange-traded funds received a record $97.6 billion from Tuesday, November 8 through Thursday, December 15, promptly TrimTabs to ask if "investors are all-in on US stocks?"

“The stampede into U.S. equity ETFs since the election has been nothing short of breathtaking,” said David Santschi, chief executive officer at TrimTabs.  “The inflow since Election Day is equal to one and a half times the inflow of $61.5 billion in all of last year.  One has to wonder who’s left to buy.”

Ukraine’s No. 1 Bank to Be Nationalized as Tycoons’ Rescue Fails - (www.bloomberg.com) Ukraine will nationalize its No. 1 bank as the former Soviet republic concludes a cleanup of ailing lenders and seeks to snuff out threats to economic recovery. The government will take 100 percent of PJSK Privatbank after its billionaire shareholders requested help, according to an announcement late Sunday. Home to a third of retail deposits, the lender had a capital shortage of 148 billion hryvnia ($5.6 billion) on Dec. 1, the central bank said. While savers are protected, Eurobond holders must help plug the gap. Privatbank’s fate has loomed large over efforts to stabilize the financial industry following a recession brought on by revolution and a separatist conflict. Addressing the lender’s struggles is key to preserving Ukraine’s $17.5 billion bailout, resuming the flow of credit and preventing a disorderly collapse later on. 

Rising Rates Ripple Through Mortgage Market - (www.wsj.com) The era of ultralow mortgage rates is over. The Federal Reserve’s decision to raise the federal-funds target rate by a quarter of a percentage point Wednesday means borrowing is about to get more expensive for consumers. Some homeowners also will feel the pain, in particular those who signed up for home-equity lines of credit, adjustable-rate mortgages (ARMs) and other variable-rate loans. Interest rates on these loans tend to rise after rate increases, resulting in larger payments for borrowers. The Fed’s rate increase is the second blow in the past five weeks for mortgage lenders and borrowers. Rates on plain-vanilla, 30-year fixed-rate mortgages have surged since Election Day by 0.76 percentage point, bringing them to an average of 4.38% on Thursday—their highest rate since April 2014, according to MortgageNewsDaily.com.

How David Cameron lost his battle for Britain - (www.ft.com) David Cameron began 2016 in 10 Downing Street and ended it at DePauw Universityin a small Indiana town, speaking for a reported £120,000 an hour. The former British prime minister is now paid almost as much for a 60-minute speech as he used to earn in a year, as he tries to make sense of his own historic failure: Brexit. Whatever he says now, Mr Cameron’s political epitaph is already written. Peter Mandelson, former British trade minister and European commissioner, said: “History will remember David Cameron simply as the prime minister who took us out of the EU. I don’t think there will be anything else. A man who took this tactical risk, which then turned into a strategic blunder.”

OTHER STORIES:

Dollar Bets Rise; Crude Extends Drone Gain as U.S. Futures Climb - (www.bloomberg.com)
Wall St economists doubtful Fed will deliver on rate rises - (www.cnbc.com)
As yuan weakens, Chinese rush to open foreign currency accounts - (www.reuters.com)

Gone in 60 Seconds: Chinese Snap Up Dollar Funds as Yuan Tanks - (www.bloomberg.com)
‘Great Rotation’ Fund Flows Accelerate - (www.wsj.com)