Category Archives for "Mortgage Industry News"
The latest survey from the Mortgage Bankers Association highlights a surge in refinance activity this week, while home purchase applications saw a slight decline. The refinancing index marked its most notable increase since September. While it might be tempting to attribute this change to post-Thanksgiving distortions, a similar anomaly last week was absent, pointing instead to the recent drop in interest rates as a more plausible cause. The weekly survey reported a minor rate decrease from 6.69% to 6.67%, contrasting with daily figures from MND showing a more significant fall from 6.88% to 6.68%. This 0.20% decline is likely driving the increased refinancing activity amid a historically low activity market. Additional findings include a rise in the refinance share of total applications to 46.8% from 38.7%, an increase in the share of VA applications to 16.3% from 13.6%, and a reduction in the 5/1 ARM rates from 6.24% to 5.81%.
Continue readingToday’s core and headline Consumer Price Index (CPI) figures matched expectations precisely. Following the release of this data, there was a rally in the bond market, and Fed Funds Futures adjusted to almost certainly predict a Federal Reserve rate cut next week. Adding to the complexity, the monthly core CPI recorded a 0.31% increase, which was rounded down to 0.3%. Therefore, the bond rally cannot be simply attributed to a lower-than-anticipated unrounded number. Instead, the focus shifts to housing inflation, often a major challenge in this data category, which showed significant improvement in this report and generally.
One key point is the Owners’ Equivalent Rent (OER), noteworthy given its role as the largest single component in the CPI. If there’s any reason for this morning’s unexpected market movement, it likely lies in the implications revealed by a related chart.
Initially, bonds saw gains, but these gains reversed, aligning with levels seen before the data release. The situation was further influenced by the Bank of Canada, which, despite announcing a 50 basis point rate cut, delivered a statement that was interpreted with mixed signals.
Continue readingBonds appeared to be consolidating before last Friday’s jobs report, which triggered a bullish breakout. Since then, we’ve seen a rapid re-consolidation back to levels seen earlier in the week. Today contributed to this trend, with most selling occurring at the start of the U.S. trading session. Some of this selling could be in preparation for this week’s Treasury auctions, but it is clear that Wednesday morning’s Consumer Price Index (CPI) data is the last major factor influencing the Federal Reserve’s decision on whether to cut rates next week. The market is well aware of this, and any significant deviation from the forecasts could lead to increased market activity.
Market Movement Recap:
– 09:13 AM: Modest overnight weakness. Mortgage-Backed Securities (MBS) are down 5 ticks (0.16), and the 10-year Treasury yield is up 2.7 basis points at 4.225%.
– 12:50 PM: MBS remain steady, still down 5 ticks (0.16), while the 10-year yield rises to 4.239%, up 4 basis points.
– 03:23 PM: Some strengthening occurred in the afternoon, with MBS down 2
From November 18th to December 6th, the average 30-year fixed mortgage rate for top-tier borrowers dropped notably from 7.08% to 6.68%, marking a 0.40% decrease over just three weeks. However, in the last two days, about a quarter of these gains have been erased, with rates edging up slightly from the previous day. This uptick brings the rates back to levels seen most of last week. Although significant rate changes are often linked to crucial economic data or major market events, last week’s largest rate improvement coincided with Friday’s jobs report. This week, the rate fluctuations have been somewhat unexpected, lacking any major economic announcements thus far. Tomorrow, the release of the November Consumer Price Index (CPI) could bring about change. Should the CPI exceed expectations, it may intensify the recent upward trend in rates. Conversely, if the CPI falls short of forecasts, rates might return to where they stood last Friday. As always, the actual impact of major economic reports hinges on how the data aligns with predictions and the details that accompany the initial figures.
Continue readingFor those who glance nervously behind shower curtains fearing an intruder, it’s wise to have a plan in place if your fears come true. Similarly, what is the Federal Reserve’s strategy now that it’s nearing a pivotal moment in its monetary policy decisions? With indications suggesting that interest rates might be approaching the “neutral rate”—where the policy neither stimulates nor slows down the economy—the Fed could soon decide to ease or even halt the expected rate cuts following those in September and November. This topic will be part of today’s Capital Markets Wrap at 3 PM ET, hosted by Polly, which will also address the future of Freddie and Fannie under the Trump Administration. Additionally, credit union mortgage strategies will take center stage at 1 PM CST, 2 PM ET during the ACUMA discussion.
The podcast for today can be accessed via the given link, with this week’s sponsor being Bundle, a company providing attorney-prepared legal documents for the real estate, mortgage, and title industry. Listeners can enjoy a 20% discount throughout the week using the code “Chrisman.” The episode features Dan Libby from MIAC Analytics, diving into novel strategies, risks, and best practices linked to hedging in the MSR market.
In the realm
Continue readingYesterday’s commentary mentioned slight weakness, and this morning’s small losses are similarly insignificant. These changes have again occurred with extremely low trading volumes and without any clear news or data-driven reasons. The movement remains negligible within the current range. While we’ve frequently discussed the support level at 4.17%, the upper limit or ceiling is more ambiguous and open to debate. However, this uncertainty offers a unique chance to find value in tools like the moving average. Currently, the 200-day moving average acts as a key gravitational point for yields. As long as yields stay within 7-8 basis points of this midpoint, the shifts remain minimal.
Continue readingMinimal Impact Observed
On Monday, bonds experienced a slight decline, with 10-year yields rising above the levels observed before last week’s job report. Mortgage-backed securities (MBS) fared somewhat better, as they currently exhibit a stronger correlation with short-term Treasury yields. The day was notably quiet on the economic front, with no major reports, marking the lowest trading volume of the year—a title typically reserved for the Friday following Thanksgiving. Despite the decreased activity, today’s downturn is considered insignificant as it continues the trend of stable yields over the past six trading days. In reality, Friday’s figures were more of an anomaly, and today the 10-year yields hovered around 4.20%, reflecting the ongoing trend of bonds remaining static while awaiting more significant market influences.
Economic Data and Events
– Wholesale Inventories: Matched forecasts at 0.2, slightly up from the previous -0.2.
Market Activity Overview
– 10:04 AM: Initially experienced strength during the night, weakened through European and early domestic sessions, with MBS declining by nearly one-eighth and 10-year yields rising by 3.6 basis points to 4.191.
– 01:51 PM: No change in MBS from
Last week concluded with mortgage rates experiencing a significant decline, reaching their lowest in over six weeks. As the new week began, rates saw a slight increase, positioning them as the second lowest during this period. Throughout November, conventional 30-year fixed rates for top-tier loans stayed mostly above 7%, but eventually settled into the upper 6% range by month’s end. On Friday, our rate index saw a decrease from 6.84 to 6.68, slightly rising to 6.72 today. Generally, economic data strongly influences rate changes, though today saw no major updates. Investors appear to be maintaining a consistent range within the bond market, which affects rates, while anticipating this week’s key economic data. The Consumer Price Index (CPI) report, due on Wednesday, holds the greatest potential to impact market fluctuations, positively or negatively.
Continue readingWith Wi-Fi disruptions becoming as impactful as snow days, the absence of internet and cable could prompt a return to traditional news outlets like newspapers, radios, and network TV for information. Recent buzz surrounds the removal of Senate Amendment 2358 from the NDAA FY 2025, which aimed to curb exploitative mortgage trigger leads. This amendment’s deletion resonated much like the anticipated decisions of the Federal Reserve, which is widely expected to make a move. However, market pricing reflects the likelihood of a 25 basis point Fed rate cut at their upcoming meeting on December 17-18, meaning mortgage rates may remain unchanged if this occurs. On a positive note, experts believe the labor market won’t drive inflation in 2025. Today’s podcast, sponsored by Bundle—a provider of legal documents for the real estate, mortgage, and title sectors—offers a discount with the code “Chrisman” this week. Additionally, it features an interview with Jim Glennon from Optimal Blue discussing key focus areas for his hedging clients as we transition into 2025.
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Continue readingUntil last Friday, the yields on 10-year treasury bonds held steady at 4.17% for five consecutive days. While this level might indicate technical resistance, it’s a positive sign given that it’s over 30 basis points lower than the peaks seen two weeks before. Stabilizing at this level could be advantageous as traders await results from the upcoming auctions and inflation data releases this week. However, Friday brought a slight surprise, with yields dipping even lower. As the new week begins, bond yields have quickly returned to the previous range, with 4.17% acting as a base level. For yields to significantly decrease from here, a strong catalyst from this week’s Consumer and Producer Price Index data will be necessary, although the outcomes of the auctions might offer some additional influence.
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