Govt struggles to offload nearly $13B of MBS seized from SVB and Signature

Hi, it's Ian. Today's newsletter is 623 words, a 3-minute read.

1. Homebuyers cancel purchases at highest rate in 10 months

Home purchases across the U.S. are getting canceled at the highest rate in almost a year as rising borrowing costs weigh on buyers.

Nearly 60,000 deals to purchase homes fell through in August, according to a report released Friday by Redfin. That's equal to roughly 16% of homes that went under contract last month, the biggest share of cancellations since October last year.

More buyers and sellers scrapped deals last month as mortgage rates topped 7% for the first time since November last year, and home prices rose. The median price climbed 3% in August from a year earlier to $420,846. LINK

2. Catch up quick

🧪 Empower LOS rebrands to Dark Matter Technologies under new owner. (NMN)

🧑‍⚖️ Change Lending wins temporary reprieve on decertification. (NMP)

⚖️ Return-to-office mandates force painful housing choices. (Axios)

🐂 Wall Street comes to grips with how wrong it’s been in 2023. (Bloomberg)

3. Govt struggles to offload nearly $13B of MBS seized from SVB and Signature

The U.S. government is seeking to sell approximately $13 billion worth of mortgage bonds that were initially collected from the defunct Silicon Valley Bank and Signature Bank.

These bonds, primarily backed by long-term, low-interest loans aimed at developers of affordable apartments, represent a fraction of the $114 billion assets the Federal Deposit Insurance Corp (FDIC) inherited after intervening in the two banks.

The FDIC, considering various strategies including potential repackaging of the debt, employed BlackRock to facilitate the sale. However, early discussions with investors indicated challenges in selling the bonds. Comments from the FDIC remain pending. LINK

4. The 10 most undervalued real estate markets in America right now

CoreLogic recently released exclusive data about which US housing markets are most undervalued right now. These markets may have positive or negative home price growth presently, but they should see strong gains going forward.

Top 10 undervalued metros in the US (and their forecasted YoY home value increase)

1. Walla Walla, WA – 6.7%

2. Napa, CA – 6.7%

3. Santa Cruz, CA – 6%

4. Ithaca, NY – 5.9%

5. San Francisco, CA – 5.8%

6. Kingston, NY – 5.3%

7. Chico, CA – 5.2%

8. Dutchess County, NY – 5%

9. San Jose, CA – 3.6%

10. Elmira, NY – 2.7%

5. Lack of existing inventory drives new-home mortgages up by over 20%

Scarce supply of existing single-family homes pushed originations for new constructions higher on an annual basis for the seventh month in a row, the Mortgage Bankers Association said.

Purchase loans for newly built homes leaped 20.6% in August compared to one year earlier and 4% month-over-month on an unadjusted basis, according to the MBA's builder application survey. While still a substantial upswing, the latest figures are down from a 35.5% annual surge in July, but headed up from that period's 0.2% monthly uptick.

Coming up… Fed meeting: The Federal Reserve is expected to hold interest rates steady following its meeting on Wednesday, but we’ll still be paying attention to Jerome Powell’s press conference for his views on inflation.

☀️ See you on Wednesday!

p.s. If mortgage rates stay around 7.29% for the rest of the month, September 2023 will go down as the least affordable month for U.S. housing this century.

The current record holder: August 2023

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