What We're Hearing

I'm starting to hear some ugly predictions about how low residential originations might fall to next year. In fact, the predictions are so ugly I'm not even going to repeat them (though I might in an upcoming story slated for National Mortgage News.) Suffice to say, these bearish predictions are predicated on the Federal Reserve going cold turkey on its MBS purchases -- which is supposed to happen next Spring. If the Fed leaves the market how fast will other buyers step up to the plate and when they do, how much more yield will they (China) demand? If yield needs to be increased (to entice investors to MBS) that means mortgage rates will rise for consumers. And when rates rise will it snuff out refinancings which (according to NMN's Quarterly Data Report accounted for 73% of fundings in 2Q? If refis swoon will the purchase money business pick up enough to prevent further carnage? Answer: only if the employment picture brightens. Well, at least the servicing business will stay robust. Meanwhile, mortgage bottom fisher Wilbur Ross said this morning on CNBC that he is not investing in gold and doesn't own any positions in the commodity. He described the precious metal as a "psychological commodity," one that doesn't have a lot of industrial uses. Also this morning, bank analyst Dick Bove predicted that depositories will have robust earnings from 2010 to 2013. As for the third and fourth quarters, well, he's not so sure...