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MBS RECAP: Delayed Reaction to Fed Hurts Stocks and Bonds

  • Posted To: MBS Commentary

    Although today brought the week's most anticipated line-up of economic data as well as overnight headlines on US/China trade agreements, the biggest market mover was yesterday's Fed Minutes. At the time, I expressed confusion as to why financial markets weren't doing more to react to the Fed's most surprising update where it basically said January was a market-friendly month for Fed policy in order to address backlash over an unfriendly December. This is a gross oversimplification of a fairly tactfully worded confession, but it was a confession nonetheless. Don't get me wrong. There were plenty of other reasons for the Fed to be more market-friendly in January, but the fact remains that they took a moment to acknowledge the market's concern and to say they felt they'd...(read more)

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    Thu, 21 Feb 2019 21:48:28 GMT

Mortgage Rates Slightly Higher Today

  • Posted To: Mortgage Rate Watch

    Mortgage rates may be close to their lowest levels in more than a year, but they were slightly higher versus yesterday. Yesterday's rates were close enough to 1-year lows that no one would take exception with the claim. That said, rates on January 31st were slightly lower for most lenders. Why all the fuss? No fuss , per se. It's just that many mainstream news outlets are running stories today about the "lowest rates in more than a year" due to Freddie Mac's weekly mortgage rates survey. Indeed, if we're just comparing the Monday/Tuesday 30yr fixed rate averages (which is essentially what Freddie's survey does), this week definitely qualifies as having the lowest rates in a year. As is always the case with delayed data, by the time you read about it, the story has often changed. None of the...(read more)

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    Thu, 21 Feb 2019 21:03:00 GMT

NAR: Home Sales "Likely to Have Reached a Cyclical Low"

  • Posted To: MND NewsWire

    Existing home sales fell again in January although the decline was a minor one compared to the 6.4 percent drop in December. The National Association of Realtors® (NAR) said sales of single-family homes, townhomes, condominiums and co-ops ticked down 1.2 percent from December's annual rate of 4.99 million to a seasonally adjusted annual rate of 4.94 million. That number, the lowest since November 2015, put sales behind those a year earlier (5.40 million) by 8.5 percent. Single-family home sales declined from 4.45 million in December to 4.37 million, putting them 8.4 percent lower on a year-over-year basis. Existing condominiums and co-ops sold at an annual rate of 570,000 units in January, up 3.6 percent from last month and down 9.5 percent from a year ago. Analysts, pointing to lower mortgage...(read more)

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    Thu, 21 Feb 2019 16:29:47 GMT

Closing Rate, Refinance Share Rose in January

  • Posted To: MND NewsWire

    A 16-basis point drop to 5.01 percent in the average rate for 30-year fixed-rate mortgages was given only partial credit for a sizable uptick in the refinancing share of originations in January. Ellie Mae's Origination Insight Report for the month shows the refinancing share of originations jumped to 35 percent from 29 percent in December. The share of FHA loans that were for refinancing rose 3 percentage points to 21 percent and Conventional refinances rose from 31 percent to 35 percent. "The increase in refinances in January is likely due to seasonality with lower purchase volume tied to the holiday season as well a modest drop in rates from November and December," said Jonathan Corr, president and CEO of Ellie Mae. "We anticipate that as we move into the traditionally busier spring months...(read more)

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    Thu, 21 Feb 2019 15:05:09 GMT

Mobile App Product; TIAA/US Bank Deal; FHA, VA, Ginnie News

  • Posted To: Pipeline Press

    “Writing about music is like dancing about architecture.” A clever quote about differences which reminded me that there are differences between the national debt and the budget deficit. Beginning in 2022, U.S. annual budget deficits are on track to top $1 trillion, but some economists say that isn’t really a problem as long as the economic growth rate exceeds the rate the US pays on debt, the debt can be managed. Rates may help. SF Federal Reserve President Mary Daly says there is a possibility that no interest-rate rises will be imposed in 2019, as long as the economy progresses as expected, and Fed chairman Jerome Powell has said that "the case for raising rates has weakened somewhat." Lender Products and Services Looking for ways to grow your business? Freddie Mac is collaborating...(read more)

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    Thu, 21 Feb 2019 13:58:19 GMT

MBS Day Ahead: How The Range Expands

  • Posted To: MBS Commentary

    If you're just joining us, we've been talking quite a bit in recent weeks about a consolidation range/trend in the bond market. This refers to a series of higher lows and lower highs resulting in a narrowing trading range--one that eventually runs out of room. When we started tracking this trend, the converging lines suggested bonds would need to make a decision before the end of February, but the confluence of big-ticket data and events didn't suggest a big breakout until halfway through March. How would we reconcile that? Like this: Simply put, when a consolidating range is on course to consolidate too quickly, the baseline assumption is that we'll have to widen the trendlines a bit as certain days seemingly push the boundaries. Tuesday and Wednesday of this week were such...(read more)

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    Thu, 21 Feb 2019 13:29:23 GMT

MBS RECAP: Despite Interesting Tidbits From Fed, Bonds Barely Budge

  • Posted To: MBS Commentary

    One of the most interesting parts of today's Fed Minutes release was their characterization of the market's surprise at December announcement. At best, the Fed was seen as being a shade too optimistic about the economy and the ability to remain in a "steady as she goes" stance with monetary policy. At worst, the Fed was being oblivious to burgeoning risks. While there were real risks to consider, the most obvious risk was the fact that stocks were in full panic mode. Granted, it's not the Fed's job to placate the stock market, but they sometimes get wrapped up in such things anyway. This time around, they basically admitted as much, saying they heard that folks were surprised at their December announcement, but that those folks were now pacified by recent speeches...(read more)

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    Wed, 20 Feb 2019 22:04:23 GMT

Mortgage Rates Near Long-Term Lows After Fed Minutes

  • Posted To: Mortgage Rate Watch

    Mortgage rates finally broke from their recent "back-and-forth" pattern of the past 7 business days and moved lower for the 2nd day in a row . Although today's big-ticket event for financial markets was the 2pm release of the Fed's most recent meeting minutes (or was it Samsung's foldable phone announcement?), rates were already lower well in advance of the Fed. This feat was accomplished simply because the bond market didn't change much from yesterday, and the fact that mortgage lenders didn't fully adjust rates to reflect bond market levels yesterday. To put that more simply: rates were good yesterday. Bond markets improved yesterday, but not enough for mortgage lenders to lower rates in the afternoon. Lenders need to see a certain amount of ground covered during the day in order to go to...(read more)

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    Wed, 20 Feb 2019 21:46:00 GMT

UI Addresses Disparity in Minority Homeownership Rates

  • Posted To: MND NewsWire

    The gap in homeownership rates between white Americans and racial and ethnic minorities has persisted for years with the largest gap among black families. All demographic groups have seen their rates decline from the 2004 peak, but again decline since has been most dramatic for black Americans. Their rate has dropped 5 percent compared to 1 percent for white families and an increase among Hispanics. The rate for Millennial generation blacks is 13 percent today compared to 37 percent for white Millennials. Alana McCargo, writing in the Urban Institute's (UI's) Urban Wire Blog, says black homeownership rates are now at levels not seen since the 1960s when private raced-based discrimination was legal. She says this sustained gap has been studied, quantified and discussed thoroughly in recent years...(read more)

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    Wed, 20 Feb 2019 16:45:30 GMT

MBS Day Ahead: Closer Look at Precedents For The Next Big Move

  • Posted To: MBS Commentary

    Yesterday, I mentioned that it was rare to see short-term momentum technicals consolidate in the center of their "overbought vs oversold" range. This refers to a fast stochastic oscillator--one of many ways that traders apply math the a time series of trading levels in order to more closely examine significance and probability. In short, when the stochastic lines are over their ceiling or under their floor, that particular market is thought to be overextended. The typical conclusion is that momentum is building for a move in the opposite direction. Of course this sort of witchcraft is far from a reliable predictor of the future. Still, when we consider the messages from momentum indicators in concert with a multitude of other analysis tools, we may be able to think and talk about...(read more)

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    Wed, 20 Feb 2019 14:18:12 GMT

Digital, Pricing Products; Retail Digital/Program News, loanDepot's Smartloan

  • Posted To: Pipeline Press

    Watch out for spam emails asking for your phone number. Seems like they are trying to get past the two-factor authentication that sends a six-digit code to cell phones. And please watch out for rogue capital markets people in the lunchroom microwaving grapes just for the thrill of it. Hint: it has to do with skin & water. And speaking of water, a new law in Texas may block your access to it if you want to be part of sprawl. (Drinkable water, if you didn’t know, is a resource that will only grow in scarcity and importance; most in the U.S. take it for granted.) Lender Products and Services Looking for ways to grow your business? Freddie Mac is collaborating with clients to deliver automation and insights that provide a competitive edge. Cut back on documentation and reduce time to...(read more)

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    Wed, 20 Feb 2019 13:24:54 GMT

Mortgage Application Volume Makes a Return to Positive Territory

  • Posted To: MND NewsWire

    The Mortgage Bankers Association (MBA) said mortgage application volume rose for the first time in five weeks during the week ended February 7. MBA's Market Composite Index, a measure of that volume, increased 3.6 percent on a seasonally adjusted basis from the index for the week ended February 8. That index was revised, according to MBA, after additional data was received from participants in the Mortgage Application Survey. The week's volume was 7 percent higher on a non-adjusted basis. The refinance Index was up 6 percent. The refinance share of mortgage activity decreased to 41.7 percent of total applications from 41.8 percent the previous week. The Purchase Index gained 2 percent on a seasonally adjusted basis, ending a slide of four consecutive weeks. It was 7 percent higher on an unadjusted...(read more)

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    Wed, 20 Feb 2019 13:14:54 GMT

MBS RECAP: The Range May Be Breaking...

  • Posted To: MBS Commentary

    The range may be breaking! Well, one of the ranges we've been tracking may be breaking, as long as tomorrow sees bond markets hold the gains they saw today. Unfortunately, if that happens, it won't really mean that much--at least not yet. The range in question is the one marked by converging lines that rest along the higher lows and lower highs in 10yr Treasury yields (and many other sections of the bond market) over the past 2.5 months. This consolidation range was never going to make it past February considering the lines would have converged before than. Once it was inevitably broken, the best it could have offered us was a preview of the next horizontal level to be tested. In the current case, the diagonal line is breaking right about that same time that yields are already arriving...(read more)

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    Tue, 19 Feb 2019 22:17:56 GMT

Mortgage Rates Sticking Close to Long-Term Lows

  • Posted To: Mortgage Rate Watch

    Mortgage rates fell modestly today, making it the 7th straight business day where they've moved in the opposite direction from the previous day. This see-saw pattern is commonly seen during periods of consolidation in the bond market (which serves as the foundation for mortgages and most other interest rates). And a consolidation is often seen during times of indecision just before markets embark on their next big move higher or lower. With many uncertainties set to be resolved by mid-March, there's a good enough chance that the recent sideways momentum in rates will give way to a bigger move. There's no way to know whether that move will be toward higher or lower rates (it will likely depend on the economic data, fiscal headlines, and Fed policy updates that have yet to be announced). For...(read more)

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    Tue, 19 Feb 2019 20:47:00 GMT

Low Rates and Strong Jobs Numbers Bolster Builder Confidence

  • Posted To: MND NewsWire

    The Housing Market Index (HMI) continues to recover from the plunge it took in November and December when it dropped an aggregate of 12 points. The National Association of Home Builders (NAHB)/Wells Fargo measure of builder confidence in the market for newly-built single-family homes added another 4 points in February to the 2 it gained in January. It now standards at 62 on a 100-point scale. "Ongoing reduction in mortgage rates in recent weeks coupled with continued strength in the job market are helping to fuel builder sentiment," said NAHB Chairman Randy Noel. "In the aftermath of the fall slowdown, many builders are reporting positive expectations for the spring selling season." Derived from a monthly survey that NAHB has been conducting for 30 years, the HMI gauges builder perceptions...(read more)

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    Tue, 19 Feb 2019 15:33:41 GMT

MBS Day Ahead: Trading Range on Borrowed Time

  • Posted To: MBS Commentary

    For all of the potential market movers that anyone can discuss so far in 2019, we really haven't seen any concerted effort to take yields higher or lower from key technical levels. The higher of those levels was implied by late 2018 trading and the floor was seen 2 days into 2019. These can be seen as the upper and lower horizontal lines on today's chart. But bonds weren't content to merely trade in that historically narrow range. By February, the horizontal levels shrunk from 2.82 to 2.75, and from 2.55 to 2.62. And even then, the predisposition has been to trade narrower and narrower (yellow lines). This so-called consolidation range is now clearly living on borrowed time , as it won't take much movement in either direction to break. Keep in mind that when the yellow lines...(read more)

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    Tue, 19 Feb 2019 14:12:35 GMT

Marketing, Training Products; Another Wholesaler Exits; Conforming News

  • Posted To: MND NewsWire

    Where’s John Mellencamp when you need him ? Lenders in rural areas know that over half of U.S. farm households lost money farming in the past few years. In 2018, the median (half above, half below) farm income for U.S. farm households was -$1,548. U.S. farm debt hit more than $409 billion in 2018, the largest sum in four decades, and farming’s Chapter 12 bankruptcy filings have been on the rise in the past several years . Lender Products and Services Through the expertise of third-party service providers, AIM automates the manual processes of assessing borrower assets and income. AIM reduces the burden of traditional documentation, speeds up the loan origination process and helps you close loans faster. Freddie Mac is working hard to bring you solutions that create efficiencies...(read more)

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    Tue, 19 Feb 2019 13:53:45 GMT

MBS RECAP: Deceptively Relevant Econ Data But Range Prevails

  • Posted To: MBS Commentary

    Since Retail Sales rocked markets yesterday, perhaps bonds would be interested in responding to economic data again today? This question seemed to have been answered when bonds apparently jumped following this morning's 8:30am economic data. The only problem was that the data in question included NY Fed Manufacturing and Import/Export Prices. These are not reports that tend to cause such immediate and highly correlated movement. So what gives? For better or worse, I stare at a tick by tick stream of bond data for most of the day. Anyone else who spends their lives in such a manner would also surely have seen bonds on the move in 2 distinct ways well in advance of 8:30am. The first was a more general move that began with the European trading session. While it was general and relatively slow...(read more)

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    Fri, 15 Feb 2019 20:43:04 GMT

"Homeowners are in Great Shape," Delinquencies Improve Across the Board

  • Posted To: MND NewsWire

    Mortgage loan delinquencies were down from the third quarter of 2018 in the fourth quarter. The Mortgage Bankers Association (MBA) said the improvements held across all loan types and all stages of delinquency although there was a slight uptick in foreclosure starts. The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 4.06 percent of all loans outstanding, down 41 basis points (bps) from the third quarter and 111 bps from the fourth quarter of 2017 according to MBA's National Delinquency Survey. The percentage of loans on which foreclosure actions were started in the fourth quarter rose by 2 bps to 0.25 percent but MBA said that was probably due to the expiration of foreclosure moratoria in states affected by natural...(read more)

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    Fri, 15 Feb 2019 20:13:11 GMT

Mortgage Rates in a Holding Pattern

  • Posted To: Mortgage Rate Watch

    Mortgage rates were slightly higher today, marking the 6th day in a row where they've reversed course versus the previous day. This is the sort of behavior we see when underlying financial markets are having a hard time making up their mind (or are simply waiting for something before committing to the next big move). In the case of mortgage rates, the underlying financial market is the bond market. There are specific bonds that most directly affect mortgage rates, but they are almost always moving in the same direction as other bonds anyway. That allows us to use something like the 10yr Treasury yield to keep an eye on interest rate momentum. There we see yields locked in an increasingly narrow range since the beginning of the year. Movements inside that range aren't important to the bigger...(read more)

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    Fri, 15 Feb 2019 20:01:00 GMT

MBS Day Ahead: Range Trade Likely to Dominate Heading Into Holiday Weekend

  • Posted To: MBS Commentary

    Rates were at long term highs in early November 2019. Several global economic risks were beginning to swirl at the same time. These included a slowdown in German GDP, the weakest Chinese retail sales in 15 years, Italian budget drama, and a Federal Reserve that didn't seem to care about big stock losses in October. The Fed had released an announcement on the Wednesday before Veteran's Day weekend. That trading day saw 10yr yields hit 3.25% and they never went any higher after that. In fact, they mostly went lower--especially when the stock sell-off kicked into higher gear in December. All of the above made November and December the best 2-month stretch for rates in more than 2 years. When rates rally that aggressively, they usually take a break and move sideways before deciding if the...(read more)

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    Fri, 15 Feb 2019 14:53:39 GMT

GSEs Continue Financial Winning Streaks

  • Posted To: MND NewsWire

    Freddie Mac and Fannie Mae (the GSEs) reported solid financial results for both the fourth quarter and the entirety of the 2018 fiscal year on Thursday. The annual income was higher for both GSEs , although each posted a decrease quarter-over-quarter. Fannie Mae's total comprehensive income for the fourth quarter was $3.2 billion compared to $4.0 billion in the third quarter, and it reported a $16.0 billion total for the year. Because of ramifications from the 2017 tax act , its comprehensive income for the 2017 year was only $2.6 billion. Freddie Mac's total comprehensive income for the year was $8.6 billion compared to $5.6 billion in 2017 (it too had unusually high tax obligations that year.) For the fourth quarter comprehensive income dropped from $2.6 billion to $1.5 billion. Fannie Mae...(read more)

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    Fri, 15 Feb 2019 14:42:27 GMT

Sales Jobs; Construction, Marketing Products; Impressive Agency Earnings

  • Posted To: Pipeline Press

    Huh? Radian was recently in takeover talks ? I only know what I read in the newspapers! Sometimes I wonder if everyone isn’t in M&A talks to one degree or another, and rumors continue to swirl about a publicly-held bank in the Northwest spinning off its mortgage division. There’s a lot going on in our biz, especially with Freddie & Fannie in the present & future – more below. Even my cat Myrtle is silent, ignoring my questions about what she’s been up to lately. Lender Products and Services With the new integration between LBA Ware’s CompenSafeTM and the enterprise digital mortgage solution from SimpleNexus , loan originators can now receive real-time compensation notifications through the SimpleNexus mobile app. SimpleNexus provides LOs with a single...(read more)

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    Fri, 15 Feb 2019 14:04:20 GMT

Fewer Plan to Buy, But Others Aren't Giving Up

  • Posted To: MND NewsWire

    The perceptions, expectations, and plans of prospective homebuyers appear to be undergoing a transition according to results from the most recent Housing Trends survey report from the National Association of Homebuilders (NAHB). Rose Quint writes about the fourth quarter 2018 survey in a five-part series in the association's Eye on Housing Blog. She says that, for starters, there has been a steady erosion in the percentage of adults who said they planned to purchase a home within a year. That share slipped quarterly from 24 percent in the fourth quarter of 2017 to 13 percent in both the third and fourth quarters of 2018. Quint says the decline provides additional evidence that housing affordability has become a serious concern. Its deterioration has been driven by several years of strong home...(read more)

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    Fri, 15 Feb 2019 13:19:47 GMT

Mortgage Bankers Estimate 29% Surge in New Home Sales

  • Posted To: MND NewsWire

    While we have not yet seen figures from the Census Bureau for December let alone January, the Mortgage Bankers Association (MBA) is reporting a surge in new home sales last month. Information from MBA's Builder Application Survey (BAS) indicates that those sales, while unchanged from January 2018, increased by 43 percent compared to December 2018. The change does not include any adjustment for typical seasonal patterns. On a seasonally adjusted basis, MBA estimates sales were at an annual rate of 713,000 units. This is an increase of 29.2 percent from the December estimate of 552,000 units. Before adjustment MBA estimates that there were 54,000 new home sales in January 2019, up 45.9 percent from 37,000 new home sales in December. Joel Kan, MBA's Associate Vice President of Economic and Industry...(read more)

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    Thu, 14 Feb 2019 22:22:31 GMT