Lowest loan rates in four months: U.S. mortgage applications fell last week despite the lowest loan rates in four months, the Mortgage Bankers Association said this morning—another sign that housing likely will recover slowly from its three-year plunge. Home loan applications fell a seasonally adjusted 2.8% during the week of Sept. 25, driven down by a 6.2% drop in demand for purchase loans and a 0.8% decline in refinancing requests. The 30-year rates were the lowest since the week ended May 22, at 4.81%, after hitting an all-time low of 4.61% in March, according to the industry group.
Better-than-expected showing: The recession faded in the spring with U.S. economic activity shrinking at a pace of just 0.7%, a better-than-expected showing that buttressed beliefs the economy is growing now. The small dip in gross domestic product for the April-June quarter follows the 6.4% annualized drop in the first three months of this year, the worst slide in nearly three decades. In the final quarter of last year, the economy sank at a rate of 5.4%. The new reading on second-quarter GDP, reported by the Commerce Department this morning, shows the economy shrinking less than the 1% pace previously estimated. It also was better than the annualized 1.1% drop that economists were predicting.
Allegations groundless: The chief credit officer of Moody’s Investors Service is telling Congress that a former analyst’s allegations of inflated ratings and conflicts of interest at the firm are groundless. Richard Cantor says in testimony that the firm reviewed the complaints by ex-analyst Eric Kolchinsky, who was suspended from his job, and found them to be “unsupported.” But New York Democrat Edolphus Towns, chairman of a House panel examining the credit rating industry, says the allegations, if true, “indicate troubling behavior” in the industry. Another former Moody’s employee warned federal regulators in March about what he said were deficiencies in the firm’s monitoring of municipal bonds.
