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- U.S. Congress ends default threat, Obama signs debt bill | Reuters
It funds the government until January 15 and raises the debt ceiling until February 7, so Americans face the possibility of another bitter budget fight and another government shutdown early next year.
Although the deal would only extend U.S. borrowing authority until the first week of February, the Treasury Department would have tools to temporarily extend its borrowing capacity beyond that date if Congress failed to act early next year. But such techniques eventually run out.
…The Treasury has said it [such political dysfunction] risks hurting the country’s reputation as a safe haven and stable financial center.
Fitch Ratings had warned on Tuesday that it could cut the U.S. sovereign credit rating from AAA, citing the political brinkmanship over raising the debt ceiling.
- Big I Pushes Back on McKinsey s Report that Agents Futures Are at Risk – Insurance Networking News
This is a pretty hard-hitting article about Independent Insurance Agents & Brokers.
The role of local insurance agents and brokers is changing and their futures are at risk, according to “Agents of the Future: The Evolution of Property and Casualty Insurance Distribution,” a report from McKinsey & Co. But Robert Rusbuldt, president and CEO of the Independent Insurance Agents & Brokers of America (IIABA) disputes the findings.
Hill & Usher, of which PropertyPak is a division, is an independent insurance-brokerage firm.
- A Look at Bank Loan Performance – Liberty Street Economics
The overall performance of loans in banking portfolios has improved substantially since 2009. The aggregate NPL ratio has declined in each of the past fourteen consecutive quarters and now sits at 3.1 percent, compared with its crisis peak of 5.7 percent. Despite this improvement, however, the fraction of nonperforming loans still significantly exceeds pre-recession levels.
Digging a little further into the data, we see notable differences in performance trends by loan type.
…commercial and industrial (C&I) loans….
…consumer loan NPL rate….
…residential real estate loans held in banking portfolios showed a relatively muted recovery compared with the performance of C&I and consumer loans. Currently, 7.7 percent of residential mortgage debt is ninety days or more past due, only slightly below the 2009 peak. This persistently high delinquency rate likely reflects a range of factors, including the slow resolution and foreclosure process for delinquent loans in many states, as well as the lingering after-effects of the mortgage credit boom and subsequent collapse in home prices. Note that the fraction of nonperforming mortgages is about three times higher for the largest bank holding companies (the six firms with total assets exceeding $500 billion) than for the rest of the commercial banking industry.
Residential mortgage performance since 2007 represents a striking departure from historical patterns. Even though the nonperforming loan ratio has exceeded 7 percent for the past sixteen consecutive quarters, it didn’t even reach 2 percent at any point between 1991 and 2006. Prior to the financial crisis, residential mortgages were often thought to have relatively little credit risk, in part because the loan is collateralized by an asset (a house or apartment) that generally increases in value from one year to the next while the balance on the loan declines over time owing to amortization. Of course, contrary to this pattern, U.S. home prices fell sharply in the late 2000s, compounded by weak loan underwriting standards during the prior mortgage credit boom. Taking a longer historical view, we note that residential mortgage delinquencies and defaults were also high during the Great Depression, the last period during which the U.S. experienced a sustained national decline in home prices.
Read the article if you’re interested in how Tara Sullivan and James Vickery flesh out each area.
- Bidding wars fade away | 2013-10-15 | HousingWire
Home sellers had it made back in March when 76% of offers submitted through real estate brokerage Redfin resulted in a massive bidding war among potential buyers.
Redfin economist Ellen Haberle remembers those days well.
“It was common to hear stories of people bringing in 30 or 40 offers,” she said of the spring-selling season, “but now, they are lucky to get two.”
The reality is times have changed, and the bidding wars have given way to a more subdued market in September — one in which only 58% of Redfin offers land in a such a situation.
Experts attribute the mild slowdown to seasonal trends, rising interest rates and uncertainty about the overall economic landscape….
- 5 housing trends fall 2013 By Polyana da Costa • Bankrate.com
As mortgage rates rise, lenders will no longer see homeowners lining up to refinance their mortgages. Their golden customers now are homebuyers, and they will do whatever it takes to attract as much business from homebuyers as possible.
Expect underwriting standards to loosen up in coming months as lenders turn their attention to buyers, says Anthony Sanders, professor of real estate and finance at George Mason University. Lenders also are likely to offer incentives and reduce loan fees to entice more buyers, Sanders adds.
- BBC News – Inflation, unemployment and UK ‘misery’
The situation for British households is made worse by the slump in earnings growth. Over the last four years, regular pay has increased at about half the rate of inflation, meaning real (adjusted for inflation) earnings have been falling an average 1.6% per year.
In the past, it has been argued that the misery index should place a higher weight on unemployment than inflation. This is because workers were typically compensated for increases in the cost of living with higher wages.
Studies to measure happiness, quite the in thing these days, also stress the detrimental effects of unemployment on individual and societal well-being.