Navigating Market Shifts: Key Insights from the Latest MBS Update

The Consumer Price Index (CPI) has become a crucial economic indicator for the bond market. Of particular importance is the month-over-month core CPI figure, which excludes volatile food and energy prices. The anticipated increase was 0.2%, but the actual figure came in at 0.1%, rounded up from 0.065%.

If this monthly trend were to persist for a year, core inflation would be under 0.8% annually. With the Federal Reserve’s inflation target set at 2%, it’s understandable that bonds are experiencing a rally, despite year-over-year core inflation still being above 3%.

Adding to the positive outlook, the most challenging component of the core CPI—housing expenses—has finally seen a significant decrease. Shelter costs dropped to an unrounded 0.17% from 0.4% the previous month, falling below pre-pandemic trends.

The bond market reacted swiftly and favorably, with 10-year Treasury yields falling by about 10 basis points to 4.18%. Mortgage-backed securities (MBS) also rose by more than a quarter point. This data has significantly boosted expectations for potential Fed rate cuts, aligning with the response seen after the previous CPI report.

Navigating Today’s Mortgage Landscape: Key Insights from Industry Experts

Here’s some news for you, starting with the good: today (July 11th) marks Slurpee Day at 7-Eleven, a fun treat to brighten anyone’s day. Citigroup executives might need a bit of cheering up, considering the Federal Reserve Board imposed a $60.6 million fine on the same day for their non-compliance with a 2020 enforcement action. The issues cited include poor progress in data quality management and a failure to implement adequate controls for ongoing risk.

Of course, enforcement actions bring to mind the Consumer Financial Protection Bureau (CFPB), which was also in the spotlight recently. The CFPB issued a Notice of Proposed Rulemaking concerning mortgage servicing rules in Regulation X. If these changes are enacted, mortgage servicers will be required to prioritize helping homeowners over foreclosing when borrowers seek assistance.

For those wanting expert insights on this topic, tune in tomorrow at 10 a.m. PT / 1 p.m. ET for “Last Word” with hosts Kevin Peranio and Brian Vieaux. And don’t forget to check out today’s podcast sponsored by nCino, featuring an interview with Professor Subodha Kumar on smart home technologies.

In industry news, Essex Mortgage has unveiled a new 5 percent Down Payment

Market Insights and Mortgage Rates Analysis: A Deep Dive into July 10, 2024

Anticipation High for Thursday’s CPI Amid Market Stagnation

The bond market has seen a monotonous, sideways trend since last Friday afternoon, leaving analysts with little excitement to report. Despite notable events like Fed Chair testimony and a Treasury auction cycle, volatility remained subdued. Many are now looking to Thursday’s Consumer Price Index (CPI) for potential market-moving news.

Today’s significant activity included a 10-year Treasury auction, which received favorable reception but lacked the punch to drive substantial buying interest. Fed Chair Powell’s comments mirrored those from the previous day, eliciting minimal market reaction. As always, the upcoming CPI data holds the potential to significantly influence rates.

Market Movement Recap

10:06 AM: Overnight trading showed modest strength, though some gains were lost by 10 AM. Mortgage-backed securities (MBS) rose by 0.03 points, while the 10-year Treasury yield decreased by 1.2 basis points (bps) to 4.285%.

01:06 PM: The 10-year Treasury auction performed well, but this elicited no major market moves. The 10-year yield dipped by 1.8 bps to 4.278%, and MBS increased by 0.

Understanding the Latest Mortgage Rate Trends: Key Insights from July 2024

For over a month, mortgage rates have hovered within a tight range, with the average top-tier 30-year fixed rate staying close to the 7.0% mark. Yesterday, the rate was 7.01%, and today it has dipped slightly to 6.99%. This matches the rate last observed on June 14th, with lower figures not seen since March. Despite this recent stability, rates could see significant movement tomorrow, contingent on the Consumer Price Index (CPI) results. CPI is critical for mortgage rates because it provides the first major monthly glimpse into inflation, which is currently the main concern. The Federal Reserve has indicated that rate cuts will be considered when CPI points to a consistent return to a 2.0% year-over-year inflation rate, and the last CPI report showed positive signs. If tomorrow’s CPI continues this trend, discussions about rate cuts will become more serious. Although the Fed does not directly control mortgage rates, the rate market often responds to the same indicators the Fed prioritizes. Keep in mind, data outcomes can vary. Should the CPI reveal higher-than-expected inflation, rates might increase just as quickly as they could decrease. There’s also a possibility that the data and market reaction could be balanced enough

Navigating Volatile Markets: Insights for Mortgage Professionals on July 10, 2024

The recent stable trend began just before noon last Friday, following a bond market rally triggered by the jobs report, where 10-year Treasury yields settled at 4.29%. Since then, fluctuations have been minimal, with movements staying within a 4 basis points range and mostly even narrower 95% of the time. This stability is largely due to a lack of new, compelling economic data. Since the jobs report, there have been no significant economic releases or major events. Today’s schedule is similarly sparse. The second day of Powell’s testimony is unlikely to bring new revelations, and although the 10-year Treasury auction might cause short-term volatility, it won’t significantly affect the larger picture, especially with the crucial Consumer Price Index (CPI) report due tomorrow morning.

Key Trends Shaping the Mortgage Market Today

The only time I get asked for sex is on application forms. Ba-dum-ching! Speaking of applications, most lenders will agree that homebuyers should first meet with a loan officer rather than a real estate agent. However, real estate agents have excelled over the years at becoming the initial contact for many homebuyers. The big question remains: how much house can they really afford, considering current mortgage rates, homeowner’s insurance, utilities, etc.? Skilled originators are adept at understanding their clients’ psychology under the critical principle of “Know your borrower,” particularly for first-time homebuyers. Most homebuyers eventually remain homeowners, and data from the FHFA shows that this trend has increased over time across various demographics such as race, ethnicity, regions, and mortgage lending submarkets. (Check out today’s podcast sponsored by nCino, creators of the nCino Mortgage Suite that modernizes the mortgage lending process by uniting people, systems, and stages of the workflow. In the latest episode, attorney Peter Idziak discusses the Supreme Court’s decision to overturn the Chevron doctrine, which required judges to favor government agencies when the law is ambiguous, and its implications for the mortgage industry.)

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Understanding the Surge: Why Mortgage Application Volumes Are on the Rise This July

Last week saw a minor decline in mortgage applications on a seasonally adjusted basis, but there was a significant drop on an unadjusted basis due to the July 4th holiday. The Mortgage Bankers Association (MBA) reported a 0.2 percent decrease in its Market Composite Index, which gauges mortgage loan application volume, on a seasonally adjusted basis from the prior week. On an unadjusted basis, the Index plummeted by 20.0 percent.

The Refinance Index fell by 2.0 percent compared to the previous week but remained 28.0 percent higher than the same week a year ago. The share of mortgage activity attributed to refinancing dropped to 34.9 percent of total applications from 35.7 percent the prior week.

The seasonally adjusted Purchase Index registered a 1.0 percent increase, whereas the unadjusted Purchase Index declined 19.0 percent. Compared to the same week last year, the purchase index was down by 13.0 percent.

The rise in mortgage rates has slowed demand, with mortgage applications largely unchanged as rates hovered around 7 percent. Purchase activity saw a minor uptick, primarily due to higher FHA and VA applications, while refinance applications fell for the

Interpreting the Impacts: A Deep Dive into Mortgage Market Movements on July 9, 2024

MBS Performance and Powell’s Stance: Awaiting CPI Data

This morning saw a slight revival in bond market activity compared to a near standstill yesterday. The volatility today was largely influenced by Federal Reserve Chair Jerome Powell’s congressional testimony, which was more about what he didn’t say than what he did. Specifically, Powell refrained from signaling any imminent rate cut, sticking instead to the “data dependent” narrative. This lack of dovish sentiment kept bonds from rallying. Despite this, trading levels reverted to pre-testimony positions by market close. The 10-year Treasury yield experienced a slight uptick, while MBS posted modest gains. This movement can partially be attributed to the yield curve, with short-term Treasuries performing better and MBS aligning more closely with the 5-year rather than the 10-year benchmarks. All eyes are now set on Thursday’s CPI report for further direction in the bond market.

Market Movement Recap

11:47 AM: The market opened modestly weaker overnight, with additional losses during Powell’s testimony, mainly impacting Treasuries. The 10-year Treasury yield rose by 4.4 basis points to 4.324%, and MBS fell by 2 ticks (.06).

01:

Week at a Glance: Key Trends Driving Mortgage Rate Movements

Mortgage rates are influenced by fluctuations in the bond market, which has seen minimal activity over the past three days. Consequently, there’s been very little variation in average mortgage rates day-to-day, with no change observed today. Various events and data points can impact bond movements, including scheduled congressional testimonies with the Fed Chair. However, today’s testimony by Fed Chair Powell did not significantly affect the market, as he reiterated familiar messages. The key takeaway regarding interest rates is their dependence on economic data, with some indicators being more pivotal than others. The Consumer Price Index (CPI) release on Thursday is particularly critical. Anticipation of this data has contributed to the current stability in bond and mortgage rates. While some fluctuations may occur before the CPI release, significant movement is almost certain afterward, whether for better or worse.

The Future of Mortgage Rates: Insights and Trends from July 2024

Customer service can significantly influence a company’s success. Have you ever felt irritated when someone ahead of you in a store struggles to find a pen to write a check? Starting July 15, this issue will be eliminated at Target Stores. Meanwhile, the U.S. Postal Service continues to lose customers to digital alternatives for sending letters or checks. After raising the cost of a first-class postage stamp to 68 cents in January, the Postal Service will increase the price again to 73 cents on July 14—a 5 percent rise and 10 cents more than at the beginning of 2023. This second price hike was announced in April. Legal changes also impact customers, and recent Supreme Court decisions, such as overturning Chevron deference, have significant implications for the mortgage industry. Attorney Brian Levy discusses these in his latest Mortgage Musings. (Today’s podcast is sponsored by nCino, creators of the nCino Mortgage Suite, which integrates the people, systems, and stages of the mortgage process to create a modern mortgage lending experience. Listen to an interview with nCino’s Casey Williams for insights into how to improve back-end lender operations.)