Market Recalibration: Understanding the Impacts on Mortgage Rates in Late September 2024

Is It Time to Be Concerned About Bond Market Losses?

Since the recent Fed update, the bond market has predominantly trended in a single, rather undesirable direction, despite the necessity of such movements to maintain market stability. While the post-Fed adjustment seems essential, its implications for the future remain questionable. In essence, the answer is no. The forthcoming significant shifts in interest rates are still largely dependent on economic data. This current market adjustment appears to be a minor and temporary deviation, even if it persists for another week at its current rate.

Economic Data / Events

New Home Sales: 716k (forecast: 700k, previous: 751k)
5-year Treasury Auction: Aligned with expectations

Market Movement Recap

09:39 AM: Moderate overnight losses, primarily in Europe. MBS down 0.125 points, 10-year Treasury yield up 3.7 bps to 3.766%
10:32 AM: Further declines after early recovery attempts. MBS down 0.19 points, 10-year yield up 4.7 bps to 3.776%
01:21 PM: Slight dip following the 5-year auction. 10-year yield up 5.

Navigating the Impact of Recent Mortgage Rate Fluctuations: Insights and Trends for 2024

Last Tuesday, mortgage rates hit their lowest point in over 18 months as the bond market geared up for the Federal Reserve’s impending announcement. However, rates have been gradually increasing each day since then. By this past Monday, average rates reached their highest level since November 10th, maintaining that level through this afternoon, marking the most elevated rates in over two weeks. While this may sound concerning, it’s important to note that excluding the past two weeks, these rates are still the lowest since February 2023 and significantly lower than the peaks seen at the end of 2023 or even just two months ago.

The substantial decrease in rates leading into mid-September was largely driven by the market anticipating a major policy shift from the Fed. The subsequent correction in rates is not entirely unexpected and is likely to run its course soon. The key factor now driving rate trends is economic data, which has been and will continue to be more influential than periodic Fed policy changes. These policy decisions are, after all, driven by economic indicators.

Significantly, the end of this week holds prime importance due to the release of critical economic data. Additionally, next week is set to be crucial, culminating with Friday’s jobs report—one of the most impactful economic

Navigating Recent Shifts in Mortgage Market Trends: Analyzing the Impact of Current Events

The bond market is experiencing a lull, with excess buying interest concentrating on the short end of the yield curve. In contrast, yields on the long end have been gradually increasing. Fluctuations have occurred mainly due to weak economic indicators or dovish comments from the Federal Reserve. With no scheduled Fed speeches or significant economic reports today, it remains uncertain whether there will be momentum for a reversal similar to the one seen following yesterday’s Consumer Confidence data. This afternoon’s 5-year Treasury auction might slightly influence yields, although recent auctions haven’t been major drivers of market change.

Navigating the Evolving Mortgage Market: Insights and Strategies for Success

My interpersonal skills are solid, but I need to work on my patience with less competent individuals. Fortunately, in our industry, such encounters are rare, and I haven’t seen any recently. At the Nebraska Mortgage Association Annual Fall Conference, some discussions hark back to about four years ago when rate locks were extremely common. However, the emphasis is on future developments. The general sentiment I pick up from various events, including this one, is positive—perhaps not outstanding, but certainly optimistic. Many companies have achieved success through cost-cutting measures. Firms that retained their servicing rights and associated income have likely shifted their focus to thriving on production profits instead.

Another key trend involves the Agencies’ apparent disfavor towards cash-out refinance products, creating an opportunity for non-Agency investors specializing in DSCR and non-QM loans to fill the gap. As the yield curve begins to normalize, there is an anticipated rise in popularity for shorter-term home loans such as 3-1, 5-1, or 7-1 adjustable-rate mortgages.

Additionally, today’s podcast, sponsored by Silk Title Co., delves into the gap between the hype and reality of electronic closings and remote online notarization, featuring an interview with attorney Jaime Kosofsky.

Navigating Market Fluctuations: Insights from the Latest MBS Trends

Early Trading Concerns Mitigated by Labor Market Indicators

Initially, domestic trading hours raised alarms that the post-Fed rate recalibration might still be ongoing. Yields increased by several basis points from previous closing levels, even surpassing yesterday’s highs, which is not ideal for those hoping for bond stabilization. However, everything shifted after the release of Consumer Confidence data. Although this report typically doesn’t significantly impact the bond market, its “labor differential” component has gained attention recently. Calculated by subtracting the “jobs hard to get” figure from “jobs plentiful,” the differential indicates a weakening job market. This trend is generally associated with more aggressive rate cuts by the Federal Reserve.

Economic Data/Events

FHFA Home Prices
– Actual: 0.1%, Forecast: 0.2%, Previous: 0.0%

FHFA Annual Change
– Actual: 4.5%, Previous: 5.3%

Case Shiller Home Prices
– Actual: 0.0%, Forecast: 0.6%

Case Shiller Annual Change
– Actual: 5.9%, Previous: 6.5%

Consumer Confidence
– Actual: 98.7, Forecast: 103.8, Previous

Navigating Mortgage Rate Fluctuations September 2024 Update

While the Federal Reserve plays a significant role in influencing interest rates, it’s far from the only factor at play. Notably, even though the Fed adjusts rates, mortgage rates often move in the opposite direction. Illustrating this, mortgage rates have generally edged up since the Fed’s recent rate cut. The Fed itself acknowledges that its decisions are heavily influenced by the broader economic environment, much like the financial markets that drive daily rate fluctuations. Currently, the labor market is under intense scrutiny. Signs of weakening in the labor market could prompt the Fed to continue cutting rates. Today’s Consumer Confidence report highlighted the largest disparity in years between those who found jobs plentiful and those who found them scarce. Following this report, the bond market, which has a direct impact on rates, saw immediate improvement. Consequently, mortgage lenders who had initially set slightly higher rates were able to lower them mid-day. This resulted in rates being marginally lower compared to the previous day. More significant economic data is expected later in the week, with key reports arriving in early October.

Navigating Mortgage Market Trends: Insights from September 2024

Today, I bid farewell to Illinois, home to the world’s largest corn maze, and make my way to Nebraska, famous for housing the world’s largest ball of stamps—and the birthplace of CliffsNotes, invented in 1958. No matter where I travel, the topic of regulation and its financial implications for lenders and consumers alike is ever-present. My cat Myrtle would have definitely concurred. Recently, I received a note from a seasoned industry professional suggesting that the industry should shift its narrative. Instead of highlighting how regulations significantly cost lenders without adding revenue, we should focus on how these regulations increase the cost of loan transactions for consumers.

The title industry is not isolated from the broader trends affecting our field. This month’s episode of “Mortgages with Millennials,” airing today at 10 a.m. PT/1 p.m. ET, features Nuria Rivera, CEO of Novation Title Insurance. Hosted by Kristin Messerli and Robbie Chrisman, the discussion will cover topics such as Latino housing, the Hispanic Wealth Project, and the importance of targeting the Latino market in business strategies. They will also explore the purchasing power within this demographic and delve into Nuria’s inspiring journey of immigration and entrepreneurship, emphasizing the significance of cultural understanding.

Today’s podcast is

Navigating the Unpredictable Mortgage Markets: Insights for September 24, 2024

Monday’s trading session brought some optimism that the post-Fed downturn might be tapering off, though this view is based purely on technical indicators. Essentially, we understand that the bond market was eager to rally before last week’s Fed announcement but has mostly been in a sell-off mode since. This selling trend will eventually exhaust itself even in the absence of new economic data. However, earlier today, it appeared the sell-off was still underway, with losses moderate yet sufficient to extend the correction. The landscape started to shift following a notably weaker Consumer Confidence report.

Understanding the Impact of Market Volatility on Mortgage Rates: Insights from September 2024

Is the Post-Fed Correction Stabilizing?

This morning’s bond market appeared to indicate a continuation of last week’s post-Fed correction. However, the situation showed signs of potential stabilization by the afternoon. Both Treasuries and mortgage-backed securities (MBS) rallied during the late morning and early afternoon, reaching back to unchanged levels, although they did pull back slightly towards the end of the day. Comments from Fed’s Goolsbee coincided with this reversal, but the trading volume suggests other factors may also be at play. As such, today’s milder weakness could signal that the post-Fed correction is leveling off. Tuesday’s market performance will offer further insight.

Economic Data and Events

S&P Services PMI came in at 55.4, compared to the forecast of 55.3 and the previous reading of 55.7

S&P Manufacturing PMI was 47.0, below the forecast of 48.5 and the previous reading of 47.9

Market Movement Recap

9:55 AM: The market was slightly weaker overnight with additional losses after the PMI data release. The 10-year Treasury yield increased by 4 basis points to 3.781%, and MBS decreased by 6 ticks

Key Factors Influencing Mortgage Rate Trends as Fall Approaches

Last week, mortgage rates experienced a slight increase after hitting long-term lows prior to the Federal Reserve’s 0.50% rate cut announcement. Essentially, mortgage rates had preemptively adjusted for the expected rate cut, leading to a mild correction once the announcement was made. As the new week began, this corrective trend continued with a modest rise in rates on Monday. However, the bond market, which influences daily rate changes, saw a recovery by midday. While a bond market recovery typically applies downward pressure on rates, most lenders prefer to adjust their mortgage rate offerings the following morning unless there are significant bond market movements. As a result, mortgage rates are higher today, but the bond market’s performance suggests that the post-Fed rate correction might be stabilizing.