Category Archives for "Mortgage Industry News"
Mortgage rates were somewhat elevated earlier today than the preceding day’s final figures, although the landscape shifted post 10am ET. This change was triggered by the day’s economic indicators prompting the bond market to reverse its daily losses, and consequently surge to the peak values observed in over a fortnight. This trend bodes well for mortgage rates as they are predominantly influenced by the bond market’s trading levels. However, the drawback is that mortgage lenders are generally reluctant to alter set rates during the day unless bond fluctuations leave them with no other option. The day saw sufficient instability to cause a majority of lenders to reassess their initial quotes, thereby reducing the average to slightly below the previous day’s rates.Continue reading
Discussion surrounding ISM Manufacturing has been sparse this week, with the release of Thursday’s PCE data – the first significant report in over two weeks – taking precedence. The focus shifted towards the initial report rather than on ISM Manufacturing’s record of influencing market trends. The separation of ISM Manufacturing from its usual prominent counterparts scheduled for next week didn’t help either. However, the recent 47.8 vs 49.5 findings has brought attention back to ISM Manufacturing, facilitating a notable market rally to the highest levels in over a fortnight.
This surge, although promising, is far from solidified; it’s merely one day of ventures beyond our recent constraints. The rally isn’t done yet. Confirmation of this breakout hinges on both technical and fundamental substratum, hinged on softer economic data expected next week. In the event of a contradicting narrative from ISM services, markets are likely to lend them greater weight.
Speaking of which, what is the correlation between ISM services and manufacturing? This question was broached on MBS Live today, leading to the creation of the charts that followed. At a macro level, a strong correlation exists between the two as they collectively gauge the economy’s momentum. However, a surprising lack of synchronicity is observed over shorter periods. This divergence suggests that the upcoming ISM Services data could be unpredictable.Continue reading
On a broader scale, it appears that mortgage rates are slowly but steadily climbing. However, in the immediate term, we saw a decline, which can be considered a win. The change was enough to bring today’s rates to the lowest they’ve been all week, down from near three-month highs quoted by most lenders yesterday. This shift, however, is more reflective of tight fluctuations rather than a considerable broad change. It’s worth noting that there may be contradicting reports about mortgage rates, largely due to Freddie Mac’s weekly survey indicating a climb in rates over the past two months. But the survey’s average over the past five days and certain exclusions, like points, can often diverge from actual experiences. The fact remains that conventional 30-year fixed rates for top-tier cases are solidly in the low 7% range. In certain instances, such as when discount points are paid or more aggressive quotes are given, it’s not out of the question to find rates in the high 6% range, but that’s not the norm. The bond market’s reaction to eagerly awaited inflation information seems to be driving today’s improvement. The inflation rate, as predicted, helped with rate recovery, aided additionally by jobless claims and Chicago PMI data. However, the market’s actual focus lies on crucial reports due next week, particularly Friday’s jobs report. The Consumer Price Index (CPI) due the week thereafter also holds significance. These two will significantly influence financial market discussions and the Fed meeting scheduled for the week after the CPI release.Continue reading
The major piece of economic data that we were eagerly awaiting today was the PCE inflation for January. Our attention had been concentrated on this report since the latest Consumer Price Index (CPI) was released on February 13. Its weight became crucial as it bridged the gap between the CPI and the upcoming Nonfarm Payroll data due on March 8. Interestingly, its value is becoming more apparent today, albeit ambiguously. Its role in leading a bounce back from a weakened overnight position is difficult to fully credit, as a significant surge in ongoing unemployment claims (the most since an anomalous increase in November) arguably deserves recognition. Additionally, we noted a significant response to the Chicago PMI later in the morning.
The Unemployment Claims metrics demand further scrutiny due to the delay in the PCE data, which ran 10-30 seconds late depending on the traders’ preferred delivery method. This allowed for a clear observation of the Claims data’s impact, with majority of the initial gains already seen by the time PCE data was released. Furthermore, a subsequent fall in yields in response to the Chicago PMI data indicates a possible appetite for economically pessimistic data in the market. This reaction is slightly more intense than usually observed for this report. It would indeed surprise many if such selling occurred had today’s figure exceeded the forecast as extensively as it fell short.Continue reading
As February 29 signifies the addition of a 366th day to balance the calendar year with the astronomical or seasonal year, there’s always something fascinating to learn from astronomers. Correspondingly, we witness similar mysteries in the world of finance and business. For instance, when Wells Fargo exited correspondent banking, the move left other correspondent investors wondering about the underlying reasons. Currently, Rocket Companies is drawing attention as they plan to shut down Rocket Pro Originate, a mortgage origination platform for real estate agents and financial professionals, in June. What insights is Rocket acting upon that others may not be privy to?
Staying adaptable is key in this ever-evolving landscape. This week, I had the opportunity to conversate with Alanna McCargo, the president of Ginnie Mae, a crucial player in the scale of FHA & VA programs. Under McCargo’s leadership, Ginnie Mae is making concerted efforts to stay ahead of market shifts, providing immense support to first-time home buyers.
The week’s podcast, sponsored by nCino, producers of the technologically advanced nCino Mortgage Suite, will be available from 8:30AM ET. The Suite amalgamates mortgage-related processes, systems, and personnel with its three core products: nCino Mortgage, nCino Incentive Compensation, and nCino Mortgage Analytics. A conversation with Tyler Prows from nCino about the influence of technological innovation on mortgage processes will also be featured.
For those in lender and broker services, an exciting new development has been unveiled: Dara by Sagent, the first-ever mortgage software platform to amalgamate all data and user experiences for servicers and homeowners throughout the entire servicing lifecycle. Dara significantly streamlines the mortgage servicing tech stack for the first time in years, focusing on six key areas: Core, Consumer, Default, Data, Movement, AI. It enhances auditing capabilities while minimising servicer errors, offering an unprecedented level of tech-based control and simplification.Continue reading
The bond market witnessed mild fluctuations today, mainly attributed not to economic data but rather to an increase in corporate bond issuance around 9am which caused some selling, and the 3pm close that caused some buying. Despite these movements, the overall impact was minimal, with bonds margins recording modest gains, reinforcing the ongoing sideways trend that started following the Feb 13 CPI data.
As for the economic data and events, the Q4 GDP revised data was slightly below the forecast at 3.2% compared to the forecasted 3.3%. The GDP PCE price index was slightly higher than the expected 2.0% at 2.1%. Meanwhile, wholesale inventories were down at -0.9% as opposed to the forecasted 0.1% and the previous 0.4%.
The market movement had its share of mild fluctuations throughout the day. By 8:58 AM, there were modest gains with almost 1bp down in the 10-year treasury yield and MBS up by 2 ticks. By 11:42 AM, the market saw little change from the previous update despite mild fluctuations. The 10-year yield was down by 1.2bps and the MBS was up by 3 ticks. And finally, by 3:27 PM, the bond market strengthened during the 3pm CME close, the 10-year yield was down by 3.5bps and MBS had risen a quarter point in 5.5 coupons and an eighth in 6.0 coupons.Continue reading
Amidst the revelation of crucial economic indices like the Gross Domestic Product (GDP), interest rates moderated by bonds maintained an impressive consistency on Wednesday, adding to a succession of tranquil days spanning over a fortnight. This aligns with the expectations given the release of the recent Consumer Price Index (CPI) report barely two weeks back, which saw rates taking a significant leap. Consequently, this resulted in yesterday’s average 30-year fixed rate aligning with its peak from approximately three months back. This makes today’s minimal enhancement relatively insignificant.
Although the GDP can give a broad perspective, it generally struggles to provide the most pertinent signals that the market may need; this is also due to the data being somewhat outdated. The most recent GDP figures, for instance, still incorporate data from October to December 2023, a trend that will likely persist in the forthcoming month’s release. Essentially, the GDP appears to be an expansive yet outdated evaluation of the US economy from an investment standpoint.
In a market driven by investors’ decisions, factors such as major employment reports – scheduled for release in the coming Friday – or next week’s CPI hold more significance than the GDP data when steering interest rates.Continue reading
The bond market certainly depends on data, but not just any data. It can be easy to assume that metrics like “Gross Domestic Product (GDP)” and “Core PCE Prices” significantly influence the bond market. However, that can be misleading, particularly when one of the day’s data items resembles “Core PCE”, a favored indicator for the Federal Reserve’s inflation goals. The more pertinent Core PCE will be announced tomorrow, though it’s not as crucial as the Consumer Price Index (CPI). The PCE data for today, a part of the GDP data, dates back to October-December 2023, which is now irrelevant given we nearly have all the important data for January. It’s no wonder the market isn’t interested.
A surge in the market around 20-30 minutes later was tied to an abundance of new corporate bond issuance.Continue reading
During the TMBA’s Secondary Conference held in Houston, conversations inevitably centered on the state of interest rates and their impact on the economy. Interestingly, the national expenditure on interest payment has now surpassed defense expense. In contrast to this national scenario, Texas has a notably positive environment for businesses. It is also worth noting that California, ranked first nationwide for residential lending, is not as favorable for enterprises due to its high cost of living and complicated permit process. However, California’s high living cost primarily stems from its income tax rather than property tax. A 2024 comparison of property taxes across the U.S. shows that Californians face the 34th highest annual taxes on median-value homes, which contrasts with New Jersey, Illinois, and Connecticut who have the highest annual home taxes. On average, an American household spends $2,869 per year on real-estate property taxes, and those in the 26 states with vehicle property taxes pay an additional $448 annually. This week’s podcast features an intelligent conversation with SoFi’s Liz Young, discussing the significance of Treasury auctions and their influence on consumer interest rates. The talk was sponsored by nCino, the creators of the nCino Mortgage Suite- a comprehensive solution for modern mortgage lenders.Continue reading
For the week ending on February 23, there was a noted drop in mortgage activity, marking the third week in a row of this trend. This has been confirmed by the Mortgage Bankers Association (MBA) whose Market Composite Index, used to track mortgage loan application volume, reported a 5.6 percent decrease on a seasonally-adjusted basis from the previous week; a 3.0 percent decrease before adjustment. The Refinance Index fell 7.0 percent compared to the week before and was also 1.0 percent lower than the same period last year. The volume of mortgage activity for refinancing shrank to 31.2 percent from 32.6 percent the week prior. The Purchase Index dropped by 5.0 percent on a seasonally-adjusted basis and 1.0 percent unadjusted. The volume was 12.0 percent less compared to the same week in the previous year. The Chief Economist at MBA, Mike Fratantoni, announced the slight decrease of the 30-year conforming rate to 7.04 percent, which is still approximately a quarter-percent higher than the rate at the start of the year. This rise in rates in the past few weeks has slowed down activity, particularly for those looking to refinance FHA and VA. However, applications for new homes have increased 19 percent, a glaring contrast to the 12 percent lag in purchasing existing homes when compared to last year. The evident disparity underlines the absence of existing inventory as the main obstacle to increase in purchase volume, yet mortgage rates exceeding 7 percent are also inimical to this growth.Continue reading