Navigating Mortgage Rates Amid Surprising Market Shifts

The sun eventually sets on bond rallies, but it’s not as alarming as it sounds. Essentially, the bond market experiences counter-trend influences, even when moving strongly in one direction. Recent trends since May and last week’s CPI reaction suggest a decisive movement, implying some eventual pullback. Notably, since Thursday morning, post-CPI rally, bonds have faced resistance. This moment figuratively resets the stage for the next move, with influential economic data guiding the upcoming direction.

Economic Data / Events

NY Fed Manufacturing
– Recorded at -6.6, compared to a forecast of -6 and a previous -6.

Market Movement Recap

10:32 AM: Bonds were slightly weaker overnight but remained stable. Mortgage-backed securities (MBS) decreased by just over an eighth, and the 10-year Treasury yield rose 4.3 basis points to 4.227%.

01:04 PM: As Powell spoke, bonds lost some ground. MBS declined by 2 ticks from their highs and an eighth on the day, while the 10-year yield increased by 4.4 basis points to 4.227%.

02:55 PM: Bonds continued under pressure, with MBS down 7 ticks (.22) and the

Navigating the Latest Shifts in Mortgage Rates: July 2024 Update

We often mention five-day winning streaks for mortgage rates as rare events that significantly raise the chances of at least a temporary setback. Although longer streaks are possible, the likelihood of a pullback surges after eight days. Today marks the eighth consecutive day of improvement in mortgage rates. Does this indicate that rates will inevitably rise tomorrow? Not necessarily. Predicting whether rates will increase or decrease over such a specific time frame is never certain. More intriguingly, the bond market—which influences mortgage rates—has already experienced a minor pullback starting shortly after last Thursday’s inflation data. This pullback was mild enough for the average mortgage lender to keep rates steady since then. Moreover, instead of relying solely on historical patterns without context, it’s crucial to consider the notable economic reports that have recently influenced rates. While not as impactful as last week’s inflation data, tomorrow’s Retail Sales report is another significant indicator. Essentially, there is no strict rule preventing a nine-day winning streak if the Retail Sales figures fall significantly below expectations. Conversely, stronger-than-expected data could drive rates higher, irrespective of the historical rarity of nine-day winning streaks.

Navigating Shifts in Mortgage Rates: Insights for July 2024

Although it’s impossible to precisely measure the political impact of the recent failed assassination attempt on former President Trump, historical instances suggest that such events typically do not harm a candidate’s political standing. For example, after President Reagan was shot in 1981, his approval rating surged by 8 points. The market initially reacted during the overnight session, but this reaction was relatively muted in the grand scheme. This doesn’t eliminate the possibility of a more significant market response in November; however, similar to 2016, the most consequential political shift would be a one-party control of the House, Senate, and Oval Office.

Analyzing the Growing Role of Technology and Data in the Mortgage Industry

While this is primarily a mortgage update, there are moments in life that transcend industry news. As a somber reminder, we’ve lost notable figures recently: Dr. Ruth, who survived the holocaust by being sent to a Swiss orphanage, has passed away. Fitness legend Richard Simmons and actresses Shelley Duvall and Shannen Doherty have also died. These events touch on our roles as lenders, emphasizing how deeply intertwined we are in the lives of our clients.

Reflecting on the passage of time, it’s astonishing to realize that four years have flown by since the airing of “The Tiger King” and the scheduling of the last Summer Olympics. In the world of mortgages, the pandemic feels like a distant memory, especially in terms of rates.

World Financial Group has announced that Olympic and X Games gold-medalist snowboarder Shaun White will headline their Convention of Champions this week. Be sure not to confuse him with Sage Kotsenburg, known for his humorous Totally Dope Refi Mortgage clip.

Today’s podcast, sponsored by Calque, features an interview with PHH Correspondent Lending’s Taylor Adams, discussing the current landscape of correspondent lending.

In terms of lending tools and services, home insurance continues to pose challenges in 2024.

Market Adjustments: Analyzing July’s Mortgage Rate Swings

This week’s market dynamics faced a brief challenge from the Producer Price Index (PPI), which suggested a significant and unexpected rise in core inflation at the wholesale level. Although this initially caused some market panic, bonds quickly stabilized and regained their footing. Importantly, the factors driving the PPI increase are not expected to impact the upcoming Personal Consumption Expenditures (PCE) inflation data. Given PPI’s historical volatility, one anomalous reading isn’t enough to provoke major concern. The central focus of the week remained on the positive outcome of the recent Consumer Price Index (CPI) report.

Economic Data and Events:

Core PPI Month-over-Month: 0.4% vs. 0.2% forecast, with the previous month revised to 0.3% from 0.0%

Core Annual PPI: 3.0% vs. 2.5% forecast, 2.3% prior

Consumer Sentiment: 66.0 vs. 68.5 forecast, 68.2 prior

Consumer Inflation Expectations: 1-year down 0.1%, 5-year down 0.1%

Market Movement Recap:

08:43 AM: Markets showed slight strength overnight but gave up

Unlocking Insights: Mortgage Rates Experience July Surge

Yesterday’s highlight was the Consumer Price Index (CPI), which significantly contributed to a notable drop in mortgage rates, marking it as the second steepest decline this year. Today, the spotlight shifted to the Producer Price Index (PPI), which communicated a somewhat different message. Although PPI doesn’t wield the same influence on mortgage rates as CPI, recent occurrences have shown it can impact market behavior notably. When this morning’s PPI data was released, it hinted at another instance of market influence, but not favorably. The combined effect of the current headline and a revision of the previous month’s numbers pushed the annual PPI half a percent higher than what was anticipated. Such a scenario in the CPI would typically lead to a significant spike in rates. Despite this potential for upward pressure due to PPI, mortgage rates managed to edge lower today, although the decrease was slight. This counterintuitive improvement necessitated analysis.

The key insight was that the underlying components of the PPI data did not align with consumer-facing inflation metrics that fundamentally drive rate policy. Essentially, higher PPI figures sometimes indicate future increases in the Personal Consumption Expenditures (PCE) inflation data—a comprehensive measure of consumer inflation closely watched by the Federal Reserve—but today’s report did not

Unveiling the Latest Trends: Analyzing Mortgage Rate Movements in July 2024

Heading into today’s crucial inflation data release, rate movements were anticipated to be significant in either direction. Fortunately, the Consumer Price Index (CPI) came in considerably lower than expected, resulting in a substantial decrease in rates for the average lender.

30-year fixed mortgage rates had already dipped below 7% the previous day. Today’s decline pushed them well under 6.90%, marking the second-largest single-day drop this year. This reduction reinforces the notion that rates are trending downward following their last significant peak in late April.

CPI serves as the primary national inflation indicator each month. Investors pay closer attention to the “core CPI,” which excludes volatile food and energy prices. To meet the Federal Reserve’s 2% inflation target, the month-over-month core CPI needs to average 0.17% annually. Last month’s report was encouraging as the number dropped to 0.163%, the lowest since 2021. Today’s core CPI saw an even more significant decrease to 0.065%.

Other components of the report, such as housing expense metrics, showed even larger declines compared to their recent ranges. Given that housing inflation has heavily influenced broader CPI measurements, this report marks the long-anticipated shift in the market.

While

Navigating the Mortgage Market’s Mid-Year Turn: Key Insights for July 2024

The Producer Price Index (PPI) may not wield as much influence over the bond market as the Consumer Price Index (CPI), but recent times have seen some notable market reactions to PPI data. This concern was reignited when core PPI figures came in 0.2 points higher than anticipated, compounded by a 0.3-point upward revision for the previous month. Although this initially triggered a negative response in the bond market, the reaction was minimal and short-lived. The reason lies in the specific components of PPI that affect more crucial consumer inflation metrics, such as the PCE price index, which is due to be released later this month. Essentially, the significant PPI increase was driven by categories that do not directly influence the PCE.

Navigating the 2024 Mortgage Landscape: Trends, Tips, and Market Insights

It seems implausible to always be experiencing a higher-than-average volume of calls, as this defies the very concept of an average. The typical individual carries student loans, car loans, credit card debt, or a combination of these. Add to this scenario mortgage rates hovering around 7 percent, homeowner’s insurance that can reach thousands of dollars, utilities, property taxes, maintenance costs, and mortgage insurance, among other expenses. The collective impact of these factors, particularly mortgage rates, has eroded home affordability, putting homeownership out of reach for many prospective buyers. Despite stringent credit standards and high interest rates limiting lending growth, a significant portion of homeowners (67 percent) still believe homeownership is achievable. This sentiment has been bolstered as consumers become less pessimistic about the impact of inflation on their finances. Expert guidance can alleviate the stress of the home-buying process; currently, around 40 percent of homeowners are not well-versed in mortgage affordability or loan programs. Knowledgeable mortgage originators can play a crucial role here. Today’s podcast, sponsored by nCino, creators of the nCino Mortgage Suite, features an interview with Loan Atlas’ Tim Braheem. The discussion highlights the premier formal education platform for mortgage professionals, encompassing

Understanding the Latest MBS Market Trends and Their Impact on Mortgage Rates

Bond Market’s Restrained Rally Despite Significant Data

The highly anticipated CPI data released today suggested a significant drop in rates, with core month-over-month figures decreasing to an unadjusted 0.065, hinting at an annual core inflation rate under 1%. Additionally, shelter inflation has fallen to its lowest levels since the pandemic began, aligning with the low end of pre-pandemic figures. These factors were expected to generate a substantial market rally; however, what occurred was the second-largest drop in mortgage rates for 2024, indicating a more gradual and sustainable pace that markets prefer this time.

Market Movement Recap:

10:47 AM: The market experienced an immediate rally following the CPI announcement, with MBS rising by 3/8th and the 10-year yield dropping by 10 basis points to 4.184%.

02:03 PM: There was a modest pull-back after a poorly received 30-year auction, with the 10-year yield still down by 9.1 basis points at 4.195%, and MBS maintaining an increase of more than a quarter point.

03:42 PM: MBS are up by 10 ticks (.31) in 5.5 coupons, though down by over