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Mortgage Demand Impacted by Rising Rates
The Mortgage Bankers Association's (MBA) weekly application survey has been doing a good job of tracking with the more granular daily rate data from MND. Both are in agreement that rates were on their way up to the highest levels in several months last week--a fact that seems to have taken a toll on both purchase and refinance applications. “Mortgage rates jumped to their highest level since February last week, with investors concerned about rising inflation and the impact of increasing deficits and debt,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Higher rates, including the 30-year fixed rate increasing to 6.92 percent, led to a slowdown across the board. However, purchase applications are up 13 percent from one year ago.” Here's the full breakdown on MBA's surveyed rates from last week: 30yr Fixed: 6.92% (+0.06) | Points: 0.69 (+0.01) Jumbo 30yr: 6.94% (+0.09) | Points: 0.72 (+0.23) FHA: 6.60% (+0.01) | Points: 0.96 (+0.07) 15yr Fixed: 6.21% (+0.09) | Points: 0.72 (+0.13) 5/1 ARM: 6.16% (+0.07) | Points: 0.36 (−0.38)Source: Mortgage News Daily | 23 May 2025 | 5:39 pm
Mortgage Rates Lower Again Today, But Still Higher on The Week
The bond market is scheduled to close 3 hour earlier than normal today--a common practice surrounding federal holiday weekends. This means 3 fewer hours where trading volatility can have an impact on mortgage rate movement. Said more simply: the day is basically over when it comes to potential intraday rate changes. There is almost always a bit of rate movement overnight as mortgage lenders react to a new market landscape each morning. Today's happened to be good news for rates, but not quite good enough to get the average top tier 30yr fixed scenario back under 7%. 7% rates aren't new, but it's been more than 3 months since we've seen them with any regularity. Nonetheless, they are quite regular in the bigger picture over the past few years. With a long term high of 8.03% in October 2023 and a subsequent low near 6% about a year later, 7% is exceedingly "middle of the road."Source: Mortgage News Daily | 23 May 2025 | 4:38 pm
Servicing With AI, Borrower Portal, 2nd Lien Products; Bill Pulte, Freddie, and Fannie News
“I can’t afford an Ancestry DNA kit to learn about my relatives. So instead, I posted online that I had won the Powerball Lottery.” Speaking of news dissemination, Southwest Airlines sent out a press release about using chargers on its airplanes. Finally, in terms of spreading news, some love him, some say he’s little more than a frat boy, we have FHFA Director Bill Pulte. I was present at his Q&A in Manhattan where he basically said that releasing Freddie and Fannie from conservatorship was “not a priority” and that the process wouldn’t begin until 2026. This was changed by his boss, Donald Trump, within a day or two. Our housing finance system doesn’t need chaos for chaos’ sake. (My notes from Mr. Pulte’s stage time are below.) Speaking of the conference this week in New York, with its Naked Cowboy, on today’s episode of Last Word at 10am PT, the team will share their top takeaways from the MBA Secondary Conference in New York, including what people were really talking about on the ground. They'll also dig into the recent jump in mortgage rates and what it could mean for the market in the weeks ahead. (Today’s podcast can be found here and this week’s is sponsored by Xactus and its commitment to the continued transformation of the mortgage verification industry. Pioneering a new class of technology, “Intelligent Verification,” Xactus is redefining how the industry originates and services mortgages. Today’s has an interview with ALTA’s Elizabeth Blosser on the rising threat of real estate cybercrime, and how the title industry is fighting back with proactive strategies, technology, and consumer education to protect transactions and reduce fraud.)Source: Mortgage News Daily | 23 May 2025 | 3:47 pm
Wait... So Tariffs Are Good or Bad For Bonds Now?
The most notable development on what might otherwise have been a sleepy half-day ahead of a holiday weekend was Trump's "recommendation" of a 50% tariff on the EU, effective June 1st. It's not clear what "recommendation" means in a context where previous tariffs have been announced by executive order, but markets nonetheless reacted with a risk-off trade (stocks and bond yields dropped). This is generally in line with the prevailing correlation, but could also be confusing if we think back to April when super high tariffs were bad for bonds, and the 90 day pause provided some relief. Since then, the reaction function has returned to a more logical stance where higher tariffs (within reason) are good for bonds and bad for stocks. Last week's temporary trade deal with China was the latest evidence (i.e. lower tariffs hurt bonds and helped stocks).Source: Mortgage News Daily | 23 May 2025 | 2:37 pm
Slightly Stronger Because Not Every Day Can be Weaker
Slightly Stronger Because Not Every Day Can be Weaker Bond yields have moved almost exclusively higher in May. At the very least, they've been in an incredibly linear uptrend. Uptrends wouldn't last very long if there wasn't some push and pull (think 2 steps forward, 1 step back). And that brings us to the best case for today's gains: sellers are taking a breath. Not every day can be a sell-off. To be sure, the gains weren't inspired by data or any new fiscal developments. We can attempt to force the mid-day pop to fit a fiscal narrative based on a comment on the Senate's time frame for a vote, but we could just as easily say it was position-squaring ahead of a holiday weekend with traders leaving at lunch time today and not coming back until the middle of next week. Econ Data / Events Jobless Claims 227k vs 230k f'cast, 229k prev Continued Claims 1903k vs 1890k f'cast, 1867k prev S&P Services PMI 52.3 vs 50.8 f'cast, 50.8 prev S&P Manufacturing PMI 52.3 vs 50.1 f'cast, 50.2 prev Market Movement Recap 09:25 AM modestly weaker after spending bill passage, but back to unchanged in MBS now. 10yr down 1.3bps at 4.588 12:19 PM Nice rebound, perhaps on news that spending bill could take all summer. MBS up 6 ticks (.19) and 10yr down 6bps at 4.542 04:27 PM Heading out near best levels with 10yr down 6.3bps at 4.538 and MBS up nearly a quarter point.Source: Mortgage News Daily | 22 May 2025 | 8:38 pm
Mortgage Rates Edge Down From Recent Highs, But Remain Over 7%
Mortgage rates hit their highest level in just over 3 months yesterday with financial markets generally protesting the absence of more serious spending cuts in the spending bill. Rates care about fiscal spending because higher spending requires higher Treasury issuance which, in turn, pushes rates higher, all else equal. Although the House passed the bill early this morning, financial markets were already fairly well braced for the impact. Now that the Senate is saying the bill likely won't reach the President's desk until late Summer, markets are able to pause and reflect. One conclusion that some investors are coming to is that yields on US Treasuries are increasingly attractive as they move up through the 4% range (and in the case of 30yr bonds, the 5% range). When investors buy more bonds, it puts downward pressure on rates. As far as today was concerned, it didn't amount to much in terms of movement versus yesterday. The average lender is just a hair lower, but still over 7% for top tier 30yr fixed scenarios.Source: Mortgage News Daily | 22 May 2025 | 7:20 pm
Non-QM, QC Trends, Past Borrower Mining Tools; House Passes Spending Bill; Webinars Through Month-End
Yesterday I headed west from the conference while my son Robbie headed south to the nCino nSight event. But while in Manhattan Dawn S. asked me, “How do you know if there’s a vegan at your party?” Answer: “They’ll tell you.” It’s not hard to find someone to tell you why the “Sell America” trade is rampant in the financial markets, impacting rates and borrowers, and reminding us that politics and lending are indeed entwined. The U.S. should curb its "ever-increasing" debt burden, said Gita Gopinath, First Deputy Managing Director of the International Monetary Fund, in an interview with the Financial Times published Tuesday. Recall that Moody's downgraded the U.S. credit rating due to rising government debt and interest payments, and as fiscal analysts raise concerns over Donald Trump's proposal to extend and expand tax cuts. Gopinath noted that recent developments, including a truce on tariffs between the US and China and a US-UK trade agreement, are positive, but said "very elevated" trade policy uncertainty continues to affect the US economy. The IMF lowered its US growth forecast in April, citing trade tensions as a significant factor. The nation's growing debt reflects a persistent imbalance between government spending and revenue, with no clear reversal in sight: regardless of party, no politician seems to be able to say no. (Today’s podcast can be found here and this week’s is sponsored by Xactus and its commitment to the continued transformation of the mortgage verification industry. Pioneering a new class of technology, “Intelligent Verification,” Xactus is redefining how the industry originates and services mortgages. Today’s has an interview with Finance of America’s Ashley Smith and Ryan Schmidt on why reverse mortgages deserve more attention from the broader mortgage industry and what’s holding back adoption.)Source: Mortgage News Daily | 22 May 2025 | 3:51 pm
Conspicuous Absence of Volatility After Data and Spending Bill Vote
The most significant development of the overnight session was the early morning passage of the spending bill in the House. This resulted in only a modest extension of losses in stocks/bonds, mostly because stocks/bonds (mostly bonds) have been pricing this in throughout the week. Yields actually managed to recover into positive territory before the 9:45am ET econ data, and haven't changed much since then. All in all, an exceptionally underwhelming level of volatility given the news and the fact that this is our only real morning of econ data this week.Source: Mortgage News Daily | 22 May 2025 | 2:06 pm
Treasury Auction Blamed as Bond Vigilantes' Smoking Gun
Treasury Auction Blamed as Bond Vigilantes' Smoking Gun Vigilante justice! Taking matters into one's own hands! It's a sensational concept when applied to the bond market, but the term hasn't really done us many favors over the years. It happened to work for a headline today because the term is as over-the-top as the notion that today's 20yr auction was some magical "ah ha" moment leading to a massive reprimand of congressional budget negotiations in both stocks and bonds. In actuality, the auction was fairly average--certainly nothing that warranted the stock/bond swoon, but if markets were looking for an excuse to sell (a smoking gun?), it was one of the only options. Market Movement Recap 09:21 AM weaker overnight amid ongoing budget battle. MBS down just over a quarter point and 10yr up 5.3bps at 4.541 01:04 PM A bit weaker after 20yr auction. 10yr up 6.5bps at 4.553 and MBS down nearly 3/8ths. 02:37 PM Additional selling in both stocks and bonds. MBS down half a point and 10yr up 9.4bps at 4.582. Weakness looks to have stabilized for now though.Source: Mortgage News Daily | 21 May 2025 | 8:34 pm
