Demand for Prime Mortgages Up

The Federal Reserve released its July "Senior Loan Officer Opinion Survey on Bank Lending Practices" on Monday, offering the conclusion that "modest fractions of domestic banks, on balance, continued to report having eased their lending standards across most loan types over the past three months."

The Federal Reserve released its July “Senior Loan Officer Opinion Survey on Bank Lending Practices” on Monday, offering the conclusion that “modest fractions of domestic banks, on balance, continued to report having eased their lending standards across most loan types over the past three months.” More banks (which the Fed called “relatively large fractions”) reported stronger demand for loans over the same three months.

In synch with the news of recovering housing sales, the survey also found that a “relatively large fraction” of respondents reported having experienced stronger demand for prime mortgages during the second quarter. Lending standards over the past three months were little changed for prime mortgages and tightened somewhat for nontraditional mortgages.

In response to the second set of special questions, about one-third of the respondents who are participating in HARP 2.0 reported that HARP refinance applications accounted for a “significant share” of total refinance applications over the past three months. Moreover, a “large majority” of respondents anticipate that more than 60 percent of HARP applications will be approved and successfully completed.

The Chairman philosophizes

In his first speech of the week, Fed Chairman Ben Bernanke waxed a bit philosophic on the subject of economics, something central bankers are rarely known to do. Speaking (on tape) before International Association for Research in Income and Wealth, he posited that “the ultimate purpose of economics, of course, is to understand and promote the enhancement of well-being,” and then suggested that standard economic measurements might not promote understanding and well-being very well. “Aggregate statistics can sometimes mask important information… Exclusive attention to aggregate numbers is likely to paint an incomplete picture of what many individuals are experiencing. One implication is that we should increase the attention paid to microeconomic data, which better capture the diversity of experience across households and firms.  Another implication, however, is that we should seek better and more-direct measurements of economic well-being, the ultimate objective of our policy decisions.”

Exactly the measurements, Bernanke said, that are still a work in progress in the young field of economic well-being studies. Still, “surveys and experimental studies have made progress in identifying the determinants of happiness and life satisfaction,” he noted. “Interestingly, income and wealth do contribute to self-reported happiness, but the relationship is more complex and context-dependent than standard utility theory would suggest.”

Money doesn’t always buy happiness, in other words. Whatever his philosophic musings on Monday, Fed-watchers will be listening closely on Tuesday when Bernanke speaks at “A Teacher Town Hall Meeting,” and when he takes questions. Will there be hints of QE3? Maybe.

Hotel industry enjoys recovery

The hotel industry reached something of a milestone last week, according to STR, which tracks occupancies, room rates and revenue per available room (RevPAR) for the industry nationwide. For week ending July 28, according to STR, occupancy ended the week posting a 3.3 percent increase to 75.1 percent; average daily rate increased 4.8 percent to $108.95; and RevPAR room saw an increase of 8.2 percent to $81.87.

The noteworthy metric is that occupancies were above 75 percent, the first time that’s happened since 2007. The industry’s fortunes have improved considerably since 2009, which was the worst post-Depression year for hotels by all measurements. For instance, even at the peak of the traveling season that year (late summer), median occupancies for U.S. hotel properties barely broke 65 percent.

Wall Street was up most of the day, and then dropped toward the end, but still came out positive. The Dow Jones Industrial Average was up 21.34 points, or 0.16 percent, while the S&P 500 gained 0.23 percent and the Nasdaq advanced 0.74 percent.