Morning Report: Mortgage applications fall

Vital Statistics:

	Last	Change
S&P Futures	2474.8	2.5
Eurostoxx Index	379.4	-0.9
Oil (WTI)	49.2	0.0
US dollar index	86.0	0.1
10 Year Govt Bond Yield	2.28%
Current Coupon Fannie Mae TBA	102.93
Current Coupon Ginnie Mae TBA	103.81
30 Year Fixed Rate Mortgage	3.95

Stocks are up this morning after Apple earnings beat estimates last night. Bonds and MBS are flat. 

We will have some Fed-speak later this afternoon, but with the Fed on hold for the moment, it shouldn't be market-moving. 

Mortgage applications fell 2.8% last week as purchases fell 2% and refis fell 4%. Mortgage rates were more of less flat last week after the FOMC maintained interest rates and released a somewhat dovish statement. 

The US economy added 178,000 jobs in July, according to the ADP payrolls number. The street is looking for 178,000 jobs in Friday's employment situation report. Meanwhile, the Gallup jobs creation index ticked up to a record high. 

CoreLogic's mortgage fraud index ticked up to a new high. This is largely a reflection of 2 things: first, the index didn't exist during the bubble days, and second it reflects the movement to a more purchase dominated market, which has more moving parts and opportunities for fraud. They note two schemes that are gaining traction right now. The first is the reverse occupancy scam, where a borrower claims they are buying a property to rent out. Future rental income is used to qualify the borrower. Once the loan is closed, the borrower moves in and doesn't rent it out. The second is a pitch to investors in high cost areas to buy Rust Belt properties sight unseen and have the company manage them. Of course the buyers are paying inflated prices. 

Multigenerational homes are making a comeback as kids either move back in with their parents or bring their aging parents into their homes. This is probably a temporary phenomenon driven by high real estate prices and a softish economy, however it is also cultural as multi-generational living is common in Asia. Don't think the Waltons though. These new homes often have separate entrances, multiple kitchens and more than one master bedroom. 

We might see a debt ceiling fight this fall, as Treasury has enough money to get through September. Treasury Secretary Steve Mnuchin is asking for a clean debt ceiling hike from Congress, but it probably won't be that easy. This issue is probably one of the reasons that Sep Fed Funds futures are pricing in a negligible chance for a rate hike next month. 

The MBA's Dave Stevens weighs in on the state of the housing market. Biggest issue: tight credit and slow wage growth.