Financials Lower as Analysts Weigh In on Word of No Gov't Refi Plan (XLF)
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Up: 10 | Down: 11 | New: 6
Rating Summary:
22 Buy, 19 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 10 | Down: 11 | New: 6
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Financials are lower Friday following reports from Thursday evening no mortgage refinance program is being considered by the Obama administration.
The rumored plan -- valued at up to $3.7 trillion in mortgage refinancing -- called for owners who were current for three months on payments to refinance with a fixed 4.2 percent rate, with no other qualification needed. Word was started by a Washington Research Group analyst. For a little more color, click here.
Banks like JPMorgan (NYSE: JPM) and Bank of America (NYSE: BAC) ended Thursday's session higher.
Analysts said a refi program would hurt financial institutions. Stifel Nicolaus said that banks are the largest holders of agency mortgage-backed securities (MBSs) and bondholders would suffer the most from such a move.
Most risk would be with Keycorp (NYSE: KEY) whose asset-earning base comprised 24 percent of GSE-MBSs. Wells Fargo (NYSE: WFC) would gain the most if the plan went through, having originated one-in-four U.S. mortgages.
Rochdale's Dick Bove agreed, saying investors might have been misinformed that a refi would stem the foreclosure process, putbacks to the banking industry, and service income. None of those things would occur under any refi program, Bove contended.
Bove also noted just 21 percent of mortgages are held by banks in the U.S., with 55 percent being held by FHFA-sponsored entities Fannie Mae and Freddie Mac.
Banking stocks are lower on the session as most sectors are down this morning despite a strong nonfarm payroll reading earlier. The Financial Select Sector SPDR ETF (NYSE: XLF) is down 1.1 percent at last check.
The rumored plan -- valued at up to $3.7 trillion in mortgage refinancing -- called for owners who were current for three months on payments to refinance with a fixed 4.2 percent rate, with no other qualification needed. Word was started by a Washington Research Group analyst. For a little more color, click here.
Banks like JPMorgan (NYSE: JPM) and Bank of America (NYSE: BAC) ended Thursday's session higher.
Analysts said a refi program would hurt financial institutions. Stifel Nicolaus said that banks are the largest holders of agency mortgage-backed securities (MBSs) and bondholders would suffer the most from such a move.
Most risk would be with Keycorp (NYSE: KEY) whose asset-earning base comprised 24 percent of GSE-MBSs. Wells Fargo (NYSE: WFC) would gain the most if the plan went through, having originated one-in-four U.S. mortgages.
Rochdale's Dick Bove agreed, saying investors might have been misinformed that a refi would stem the foreclosure process, putbacks to the banking industry, and service income. None of those things would occur under any refi program, Bove contended.
Bove also noted just 21 percent of mortgages are held by banks in the U.S., with 55 percent being held by FHFA-sponsored entities Fannie Mae and Freddie Mac.
Banking stocks are lower on the session as most sectors are down this morning despite a strong nonfarm payroll reading earlier. The Financial Select Sector SPDR ETF (NYSE: XLF) is down 1.1 percent at last check.
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