Morning Report - uptick in delinquencies

Vital Statistics:

	Last	Change	Percent
S&P Futures	1700.7	-1.8	-0.11%
Eurostoxx Index	2811.4	2.4	0.08%
Oil (WTI)	107	0.5	0.44%
LIBOR	0.266	0.001	0.38%
US Dollar Index (DXY)	81.74	-0.138	-0.17%
10 Year Govt Bond Yield	2.63%	0.00%
Current Coupon Ginnie Mae TBA	104.6	0.0
Current Coupon Fannie Mae TBA	103.9	0.0
RPX Composite Real Estate Index	200.7	-0.2
BankRate 30 Year Fixed Rate Mortgage	4.37

Markets are flattish on no real news. This week is relatively data-light. Bonds and MBS are flat.

Mortgage delinquencies rose 10% month over month in June, according to Lender Processing Services, breaking a downtrend that has lasted since late last year. 700,000 people who made their May payment missed their June payment. Is this a blip or the start of a new trend? Interesting fact regarding geography - Non-current inventory is still close to peak levels in New York State (only down 5%). By contrast, California is down 59%, Arizona is down 66% and Nevada is down 47%. This explains why Northeast real estate prices are still bumping along the bottom of the bathtub while the Southwest is not. 

Home prices increased 11.9% year-over-year, according to CoreLogic. According to chief economist Dr. Mark Fleming: "In the first six months of 2013, the U.S. housing market appreciated a remarkable 10%. This trend in home price gains is at the best pace since 1977." They are forecasting prices to increase 12.5% in July. You can see what markets are hot and what markets are not below:

There were some interesting observations out of mortgage REIT Invesco Mortgage Captial (IVR). They noted that spreads have widened on agency paper and believe there is good value here. They are taking the view that the spread widening is temporary and was due to a perfect storm of REIT de-leveraging, mutual fund outflows and dealers clearing inventory for quarter's end. What does this mean to us? That mortgage rates have room to fall, even if the 10 year bond doesn't move.