Interest Rate Roundup

Wednesday, June 25, 2008

Slumping mortgage activity, more "dialing for dollars" at Barclays, and other assorted bits

Good Wednesday morning -- and Happy Fed Day! It's still a few hours until the big event so I figured I'd cover a few of the things grabbing my attention in the meantime ...

* Mortgage application activity continues to decline. The purchase loan index compiled by the Mortgage Bankers Association slumped 7.4% to 333.4 in the week of June 20. That level is the weakest going all the way back to February 2003. The overall index (including refinances AND purchases) dropped to 461.3, the lowest since December 2001. Slumping home prices, falling consumer confidence, tighter lending standards, and the weakening economy are the key challenges facing the housing and mortgage markets.

* The "dialing for dollars" process continues. The fourth-biggest bank in the U.K., Barclays Plc, announced that it will be selling $8.9 billion of new shares to shore up its capital base. The usual suspects are buying: The Qatar Investment Authority, Temasek Holdings (of Singapore), China Development Bank, etc. Someday, at some price, the banks will find a bottom. But just about every billionaire investor, sovereign wealth fund, hedge fund, and so on that has tried to call one so far has ended up with egg on his face.

* The central bank in Norway followed India's central bank this week by implementing a surprise rate increase. Norway raised rates by 25 basis points to 5.75%. The Reserve Bank of India raised the repurchase rate in that country by 50 basis points to 8.5%.

* Lots of commentary this morning on the housing rescue bills winding their way through Congress. Here's the New York Times' take, and here's some more from the Washington Post.


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