“Unraveling the Impact of Geopolitics on Mortgage Rates: A Comprehensive Market Review – January 2024”

Yesterday saw the conventional 30-year fixed rate at its peak in the last six weeks. In contrast, today experienced a slight decrease in rates despite the release of a stronger-than-anticipated GDP report. Typically, robust economic data sways interest rates negatively; however, the impact can hinge on the individual report and the extent of its outperformance. Simultaneously, the strong GDP was neutralized by several other weaker-than-forecasted reports and specific aspects within the GDP that hinted at slower inflation, something that does not sit well with rates. Despite today’s rate reduction, they linger near the six-week high, in the upper 6% area. Thankfully, the climb upwards has been gradual, conserving a significant portion of the substantial decrease from November/December. Whilst there has been a general reduction in turbulence, increased volatility may well be on the horizon due to the release of more significant economic reports in the forthcoming business days.

“Analyzing Mortgage Market Trends: Insights from January 25, 2024”

The most significant economic data of the week was released today. The findings were varied, which included an increase in unemployment claims and a decrease in durable goods. It was compensated, however, by a gross domestic product (GDP) that significantly outperformed Q4 expectations (3.3 versus the predicted 2.0). Counteracting the GDP was its own price tracking data, with the deflator falling to a mere 1.5% against a projected 2.3%. The consumer-oriented PCE price index remained steady at the central level of 2.0%. The initial reading of the Q4 GDP beating expectations raises some issues about a possible negative reaction from the bond market. Fortunately, after a brief period of instability, bonds managed to recover and enter a slightly stronger territory. The claims and price data are assumed to have contributed to this, but a rally in European bonds could be even more influential.

The chart above shows German 10yr yield figures on an adjustable overlay axis… This morning’s decrease was about 2.36% to 2.28%. Keep in mind, the source, in this case, Realtor.com, should not be mentioned in this summary.

“Analyzing Current Mortgage Rates: Insights from January 24, 2024”

The recap for mortgage rates today closely resembles that of the prior day. There was a slight increase from rates that were nearly at peak levels, marking another “highest in x weeks” point with x currently standing at six. The last time conventional 30yr rates were presented at elevated levels was on Wednesday, December 13th. Today’s rates still fall a bit short of that day’s opening figure of 7.02%, which was marked as 6.82% due to it being the final level for that day. However, today’s level is 6.95%. As is always advised, the focus should be on the shift between time periods rather than absolute levels. The reason behind the hike in rates today was logical. It is predicted that rate changes will reflect economic indicators and reliable market forces like the results of Treasury auctions. Two such instances transpired today, causing the bond market to worsen. Mortgage rates are determined by bonds, so midday losses in bonds can lead lenders to raise rates midway through the day. Consequently, the average rose to a six-week peak today. As per frequent reminders, current rates still remain lower by more than a percent compared to the October highs. The trajectory for rates remains uncertain – they could either spiral upwards uncontrollably or drop considerably. The future path will largely depend on economic data, inflation, and how the Federal Reserve interprets these factors.

“Assessing the Impact of Evolving Market Sectors on Mortgage-Backed Securities: An Insightful Analysis”

The economic schedule at last has some activities this week, albeit low-key, marked by the S&P Global PMI data announcement. Its positive results have had a noticeable impact this morning and appear to be diminishing the overnight gains. Simultaneously, the Bank of Canada announcement has added to the inconsistency with its slightly hawkish tone, causing further weakness after 9:45am ET.

On looking closely, it is evident that a significant portion of the Treasury’s sell-off occurred as the Canadian dollar was still responding to the BOC event. This trend points towards increased focus of the US bond market on the data.

Next up is the 5-year Treasury auction at 1pm ET. This is arguably the second most crucial auction in the 2-30yr spectrum, taking a backseat only to the 10yr. Like always, relevant Treasury auctions are likely to create some reaction but can also end up having negligible effects.

“Deciphering the Quartzite Market and Homeownership Parallels: A Deep Dive into Recent Mortgage Trends”

As the MBA’s IMB conference in New Orleans concludes, many participants are set to enjoy their in-flight meals. However, it might be a better choice to pick up some food before boarding. The chilled weather in New Orleans has brought out a wave of stylish leather jackets among attendees. There’s been considerable chatter about the positive developments that occurred in 2023, notably relating to mortgage rates and lenders.

Unexpectedly, we saw a decrease in inflation rates and witnessed hourly wages outperforming inflation in the final seven months of 2023. Predictions of a recession or banking crisis were incredulously averted. Further, the S&P 500 index enjoyed a 23 percent spike, and the economy expanded by a respectable 2.6 percent.

Credit costs and trigger leads dominated discussions, with John Fleming, from John Fleming Law and the Texas MBA, featured in today’s 2PM ET L1 Mortgage Matters session, offering insightful updates on the trigger lead situation.

The imminent Basel III is causing a stir, with MBA President Bob Broeksmit asserting that no bank has ever met its end due to servicing requirements. He suggests caution in relation to possible misguidance originating from Washington DC.

Please listen to today’s podcast for further information. This week’s broadcast is kindly sponsored by LoanCare. With 40 years of experience navigating market changes, LoanCare is renowned for delivering exceptional customer service through its personalized, convenient portfolio management tool, LoanCare Analytics™. They focus on customer engagement, liquidity, and credit risk to support MSR investors. Hear Deephaven’s Tom Davis discuss the Non-QM space and what to forecast for nontraditional financing markets in 2024.

“An In-depth Analysis: Trends and Influences on Current Mortgage Application Volume”

The first three weeks of the New Year saw a surge in mortgage application activity despite federal holidays hampering two of those weeks. An uptick in purchase loan activity was also observed each week. According to data from the Mortgage Bankers Association (MBA), the Market Composite Index, an indicator of mortgage loan application volume, experienced a 3.7 percent rise on a seasonally adjusted basis during the week ending January 19, after adjustments for the Martin Luther King holiday. However, without adjustments, the Index recorded a 4.0 percent drop from the prior week. The adjusted Refinance Index dipped by 7.0 percent compared to the previous week, an 8.0 percent decrease from the same week last year. On an unadjusted basis, it fell by 16.0 percent for the week and 8.0 percent year-over-year. Refinance application shares also lowered from 37.5 percent to 32.7 percent that week. The seasonally adjusted Purchase Index rose 8.0 percent each week while the unadjusted Purchase Index increased by 3.0 percent, though it remains 18.0 percent lower than the same week in 2023. Joel Kan, MBA’s Deputy Chief Economist, stated that mortgage rates saw a slight increase, but purchase activity’s upward trend persists. Conventional and FHA purchase applications are primarily driving this surge as some potential buyers aim to finalize their purchase plans early this season. Kan also noted that refinance applications fell last week, with homeowners finding little incentive to refinance due to the current rate levels.

“Unpacking The Impact: An Inside Look at FOMC Announcement on Bond Markets and Mortgages (2023 Recap)”

Swift Calm Follows Quiet

Monday had the smallest trading volume and least market fluctuation this year. Interestingly, Tuesday mirrored these conditions almost perfectly. The only major difference was the more aggressive communication from Japan’s central bank and speculation about upcoming news from the European Central Bank. The domestic market was significantly void of any influential data or news. By midday, bonds had stabilized and improved slightly by end-of-day. Mortgage-Backed Securities (MBS) dropped around one-eighth of a point while 10-year treasuries marginally increased less than 3bps. This leaves the mild, adjusting uptrend unbroken and has us anticipative of more meaningful economic data and future planned activities.

Economic Data / Events

Existing Home Sales

Sales of 3.78m, against forecast of 3.82m, previous was 3.82m

Consumer Sentiment

Measurement of 78.8, compared to 70.0 forecasted, previous was 69.7

1-year inflation expectations

Decreased 0.2%

5-year inflation expectations

Fell 0.1%

Market Movement Recap

10:12 AM Downswing overnight, Europe in the lead. 10yr up 2.9bps at 4.136. MBS shed 6 ticks (.19).

11:09 AM Lowest point just before 11am with MBS decreasing 7 ticks (.22) and 10yr momentarily advancing over 4.15%. Minor rebound now, but just barely.

02:47 PM Somewhat stronger, but still on the weaker side. MBS down an eighth and 10yr up 2.9bps at 4.136.

04:35 PM Almost no change since the last update. MBS down an eighth. 10yr increased 3.3bps at 4.14.

“Exploring the Dynamics of Mortgage Rates: A Comprehensive View on January 23, 2024 Updates”

In a day marked by minimal activity in the bond market, mortgage rates have remained relatively consistent with the trend over the past few days. Despite the major picture showing a negligible variation in rates from lenders, there has been a mild yet consistent surge when examined carefully over the past month. Today continued this trend with the rates subtly climbing to match those seen the previous Friday – their highest point since December 13. This moderate rise of 0.31% closely echoes similar fluctuations in the 10yr Treasury yields, a usual gauge used for comparison of mortgage rate changes. Such a rise is considered manageable, given the preceding significant descent of 1.20%. In business terms, this is a harmless correction. Future movements in rates are possible depending on incoming economic developments and statements from the Federal Reserve. Significant data that could trigger fluctuations won’t be available until the following week, with a handful of reports to be released on Thursday that may introduce some instability.

“Exploring the Intricacies of Mortgage Markets: A Comprehensive Review of Morning Updates for 23rd January 2024”

As financial markets prepare for a crucial Federal Reserve update next Wednesday, other global central bank developments are also attracting attention. Significant news this week includes the European Central Bank’s (ECB) meeting results on Thursday and overnight briefings from the Bank of Japan (BOJ). Allegedly, hawkish bond sentiment during the overnight session was spurred by the BOJ’s implication of possibly halting negative rates in the coming months. This either in response to the BOJ or due to apprehension about the imminent ECB meeting, sparked a swift upward jump in European bonds at 2am, which dragged US Treasuries along. Besides these central bank events, there’s a new Treasury auction cycle kicking off today, concurrent with oil prices sitting close to the month’s peak values.

The associated graph demonstrates the movements of 10-year yields from the EU and Japan, shown on an overlaid or floating axis. The source of this information shall not be mentioned in the synopsis.

“Exploring the Fascinating World of Finance: A Deep Dive into the Mortgage Industry”

In the commentary update from yesterday, there was mention of Atlantic Bay observing a noticeable increase in LinkedIn activity. Atlantic Bay’s CEO has confirmed that the firm’s Independence remains intact as it celebrates its 27th year of business. I regret any misunderstandings caused by yesterday’s update, and would like to assure you that the commentary series will continue.

Meanwhile, discussions at the conference in New Orleans are ongoing, centered around rising costs of repurchases, credit verification, and how lenders in 2023 managed to keep their businesses afloat through servicing income. It’s worth noting that New Orleans has an average elevation of 20 feet. This leads to the question of whether servicing or insuring East Coast properties is worth it, considering the dual threat of rising sea levels and the sinking rate of a third of an inch per year. These matters would affect over 2 million residents and approximately 800,000 properties. Over the course of a 30 year mortgage, 10 inches of sinking can occur.

Today’s podcast can be found here and it is sponsored by LoanCare. LoanCare has been a reliable guide for clients and homeowners through market shifts over 40 years. As a mortgage sub-servicer, LoanCare has earned a reputation for delivering individualized customer experiences and offering convenience through its portfolio management tool, LoanCare Analytics™, where they help MSR investors maintain a customer-centric approach, while effectively managing liquidity and credit risk. You can listen to an interview with Eric Seabrook from LoanCare about the consumer digital and customer experience provided by mortgage servicers. Lastly, on the topic of Lender and Broker Services and Software, it should be noted without citing the source (for example, Realtor.com) in this summary.