What's New in Real Estate!
Mortgage Rates Lower Again As Lenders Catch Up With Bonds
The bond market dictates day to day movement for all manner of interest rates, including mortgages. On election night, bond yields (another word for "rates") spiked as soon as traders felt the results were evident. The following morning, mortgage-backed bonds started out much weaker and mortgage rates were at the highest level in months. Fast forward two days and mortgage rates are back below 7% and at the lowest levels since October 25th. While that's not an exceptional leap into the past, it's certainly better than a continued move to infinity and beyond. What gives?! In not so many words, not much. The bond market had rushed to get into position for the election, and the reaction to election night itself ended up being a mere formality that was quickly erased--a testament to how accurately the market predicted where it would have wanted to be WELL in advance. Today's rate improvement wasn't as much a factor of bond market gains as it was mortgage lenders getting caught up to the gains from yesterday. Lenders have been understandably cautious given the big swings in bonds and the prospect for additional volatility. At times like this, it's not uncommon for lenders to wait a bit longer than normal to be sure bond market improvement is sustained before adjusting mortgage rates. As nice as this recovery is, it shouldn't be viewed as indicative of ongoing success. Rates continue to face headwinds that will only truly be defeated by weaker economic data and lower inflation. To that end, economic reports will continue playing an important role. Next week's headliners include the Consumer Price Index (CPI) and Retail Sales on Wednesday and Friday respectively. Monday is closed for Veterans Day.Source: Mortgage News Daily | 8 Nov 2024 | 10:22 pm
HELOC, Broker, Appraisal, DPA Products; Why Credit Costs Matter; Variance in Q3 Earnings
Many believe, and with good reason, that there will be some turnover at the CFPB coming up. Here are the pay grades if you’re interested in a job. (I can’t attest to the accuracy of Rohit Chopra’s comp.) The MBA’s latest prediction for 2025 is that residential volume will be up nearly 30 percent, and the industry hopes the MBA is right. According to Curinos’ new proprietary application index, refinances decreased 38% in October; the purchase index decreased 32% for October as a whole. But October 2024 funded mortgage volume increased 50% YoY and increased 15% MoM. (Curinos sources a statistically significant data set directly from lenders to produce these benchmark figures.) At the other end of the mortgage digestive system, in the capital markets, the Fed’s MBS holdings have been running off, often through refinancing, so someone out there is doing them! (Today’s podcast can be found here, and this week’s is Sponsored by Calque. Partner with Calque to offer better loan solutions. Scale your business with a partner that puts your brand first and empower your clients to buy before they sell. Hear an interview with Prajna AI’s Ramesh Sarukkai on how mortgage companies can utilize the various types of AI to maximize enterprise value.) Lender and Broker Software, Services, and Products Major announcement from Byte Software. The enterprise-class features in BytePro are now available in ByteWeb, a new browser-based LOS platform featuring a fresh, modern user interface. With unlimited custom screens and fields, validation rules, macro automation, TRID warning lights, and much more, ByteWeb is available with the same affordable pricing structure that has allowed Byte clients to lower their costs while other lenders are stuck paying minimums based on 2021 production. You don’t have to choose between LOS functionality and affordability. It’s time to stop settling and start doing things your way. Designed to be both powerful and flexible, Byte gives you total control over your loan process and the freedom to do business the way you want. Maximize efficiency with a new browser-based UI, unlimited custom screens & fields, powerful data governance, flexible API, and workflow automation you can deploy with your in-house team. Request a demo to see why 97% of mortgage bankers say they would recommend Byte to their peers or visit here to learn more.Source: Mortgage News Daily | 8 Nov 2024 | 5:10 pm
Bonds Making a Stronger Case For Buying The News After Selling The Rumor
"Buy the rumor, sell the news" is an age-old aphorism in financial markets for a reason. It accurately speaks to the real and repeatable phenomenon whereby traders trade all the information and indications about a specific event well before the event itself. The most obvious and and reliable example is that of Fed rate cuts/hikes which even have their own futures contracts. The most relevant example at the moment is that of the pre-election trade whereby bonds priced-in greater odds of a Trump victory and full republican control of congress. Traders knew rates needed to move higher but the perfect amount of selling was/is a moving target. It continues to be sorted out, but the past 2 days tell us that the market did a very good job of selling almost exactly the correct amount of the rumor. Traders are now buying the proverbial news. All of the above can be loosely visualized in the following chart, which shows 10yr yields hitting closing levels at or near 4.27 on 6 of the 7 days ending on election day. As expected in our base case, there as an obligatory bout of additional selling after the election and we've since returned almost perfectly to the 4.27 baseline. This is actually NOT YET a great example of buy the rumor sell the news. 4.27 is a very high yield as recently as the beginning of last week. A true example would involve a return of yields back toward 4%--something that doesn't seem to be in today's most immediate cards. Indeed, the moment 10yr yields hit 4.27 this morning, they bounced higher and are now back over 4.31%.Source: Mortgage News Daily | 8 Nov 2024 | 4:41 pm
Breaking Down The Big (Mostly) Non-Fed-Related Rally
Breaking Down The Big Non-Fed-Related Rally As intraday charts give way to daily charts in the coming weeks, it will be all too easy to look back on today's calendar and conclude that it could only have been the Fed announcement that was capable of motivating a 10+bp rally in Treasuries and a half point gain in MBS. As we here in the past know, that rally was largely already in place ahead of the Fed announcement. We can't chalk it up to the high continued claims number, though that may have helped. The simplest theory is that there are "dip buyers" in bonds now that the election is over. It's not a bad one, but we could just as easily say that a glacial drift toward higher rates got ahead of itself yesterday and fell back in line with the trend today. Either way, MBS and mortgage rates have outperformed the move in Treasuries, and there's at least a moment of hope for optimists to imagine an inflection point. Econ Data / Events Jobless Claims 221k vs 221k f'cast, 218k prev Continued Claims 1892k vs 1880k f'cast, 1853k prev Market Movement Recap 08:40 AM Slightly stronger overnight and little-changed after jobless claims data. MBS are up a quarter point and 10yr yields are down 1.6bps at 4.415 12:35 PM Additional gains all morning. MBS at best levels, up half a point. 10yr down 9bps at 4.34 02:27 PM unchanged to a hair weaker after Fed announcement. MBS up 15 ticks (.27) and 10yr down 7.6bps at 4.356 03:11 PM 2 way trading after Powell press conference, but mostly stronger. MBS up more than half a point and 10yr down 11.3bps at 4.318Source: Mortgage News Daily | 7 Nov 2024 | 10:12 pm
Tricky Day... Mortgage Rates Fall Significantly, But Not Because of The Fed
There's a distinct risk that, even in the financial community, that people will look back on today's drop in interest rates and conclude it must have something to do with the Federal Reserve's latest policy announcement. After all the Fed did cut its policy rate by 0.25% today, and the Fed was the only big ticket event on the calendar. Unfortunately, almost all of the improvement in rates was in place well before the Fed announcement was released. This isn't a case of financial markets moving into position for an expected outcome either. The Fed's cut was 100% expected, and Fed Chair Powell had nothing too surprising to say (even if the delivery was memorable when he was asked if he'd resign if asked by the president). So why did bonds/rates improve so much? We have to apply the same logic to gains that we've applied to other election related volatility. The election mobilized a massive (and massively volatile) amount of trading positions in the bond market and beyond. We've seen several rate spikes that were just as bad as today's rate drop was good. All we could do with many of those was simply take them in stride and chalk them up to the exceptional volatility and highly charged environment. Today's friendly volatility is a constant invitee to these episodes, even if it feels like it doesn't show up as frequently as other guests. To some extent, this morning's Jobless Claims data may have contributed, but it doesn't make sense to give it too much credit until other data shows similar cause for concern (continuing jobless claims are up to the highest levels in several years).Source: Mortgage News Daily | 7 Nov 2024 | 9:33 pm
Here's What Changed in The New Fed Announcement
Recent indicators suggest that economic activity has continued to expand at a solid pace. Job gains Since earlier in the year, labor market conditions have slowed, generally eased, and the unemployment rate has moved up but remains low. Inflation has made further progress toward the Committee’s 2 percent objective but remains somewhat elevated. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance. The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate. In light support of the progress on inflation and the balance of risks, its goals, the Committee decided to to lower the the target range for the federal funds rate by 1/2 1/4 percentage point to 4-1/2 to 4-3/4 to 5 percent. In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.Source: Mortgage News Daily | 7 Nov 2024 | 7:00 pm
Token Resilience After Data. Is The Fed Going to Mention The Election?
This morning's only relevant economic data was weekly jobless claims. The headline was right in line with forecasts and the non-adjusted number keeps 2024 right in line with recent years... no trading motivations there. But the continuing claims number is still rising. Not only was it higher than expected, but it was also the highest since late 2021 (when it was still on the way down from lockdowns). If there's a justification for this morning's modest gains apart from a "sell the rumor, buy the news" approach to the election, with a possible tailwind from the House being close enough to a stalemate to avoid the least bond-friendly implications of a red sweep. A reminder or two on this afternoon's Fed announcement... A 25bp rate cut is a foregone conclusion. This cut comes in response to economic data that's come in over the past year and the desire to bring the Fed Funds Rate closer to a neutral level in an attempt to engineer an even longer-term soft landing than we've already seen. The Fed's best guess is that we have plenty of room to cut without putting upward pressure on inflation. If forthcoming data suggests they're wrong, they'll stop cutting and acknowledge the unexpected shift in data. There is no dot plot today, so we will not have a detailed idea of how the most recent jobs report changed the rate cut outlook. That said, Powell may carefully comment on such matters in a vague and data-dependent way. The Fed will not go out of its way to mention anything about the election or the political landscape impacting its decisions. Reporters will no doubt ask, and Powell will take that opportunity to reinforce that politics have no impact on the Fed's decisions except inasmuch as political decisions impact inflation and the labor market--things which actually do have an impact on the Fed's decisions. In other words, the Fed doesn't care about the politics, only the ultimate impact on the economy. All of the above having been said, individual Fed members may have different feelings about economic projections in light of prospective fiscal policy changes, but that would only be expressed in the form of the quarterly summary of economic projections, if at all. Ultimately, even if a Fed member had a big change of heart due to prospective fiscal changes, they would still have to wait for economic data to confirm their assumptions before it would change the Fed's anticipated course of policy action.Source: Mortgage News Daily | 7 Nov 2024 | 5:27 pm
Best Ex, Hiring Risk Mitigation, DPA, Correspondent, Dashboard Tools; MBA Pres. Broeksmit on the Election
You knew that Minnesota has 90,000 miles of shoreline, more than California, Florida, and Hawaii combined, right? Here at Servion’s Fusion 24 event in Minneapolis, credit union talk is focused on helping members: “If you want a client for life, ask them about their life.” Some of the talk also is about the results of the election. Certainly the bond market reacted to the election results, and an owner of a mid-sized mortgage bank wrote to me yesterday opining, “Well Rob, we’ll have less business, so more cost cutting, but be less regulated in doing it.” Today’s episode of The Big Picture, sponsored by Gaffney Austin, LLC, at 3PM ET and will focus on the election results with MBA President Bob Broeksmit. (You can click here to register.) Technology and cybersecurity are also topics, and if you’re interested, here’s a real-time map of cyber-attacks on the U.S. (Today’s podcast can be found here, and this week’s is Sponsored by Calque. Partner with Calque to offer better loan solutions. Scale your business with a partner that puts your brand first and empower your clients to buy before they sell. Hear an interview with Champions Funding’s Evan Stone on his view of the current non-QM space and how expanding guidelines are putting more people into homes.) Lender and Broker Software, Services, and Products In today’s competitive market, lenders must capitalize on every opportunity to reduce costs and drive operational efficiency. By leveraging automation to accelerate the underwriting process, you can close loans faster and deliver a better borrower experience. Click here to discover how Global Credit Union partnered with ICE Mortgage Technology to streamline income calculations, minimize underwriting support, and access vital information earlier in the process.Source: Mortgage News Daily | 7 Nov 2024 | 3:20 pm
Does The Fed Still Matter?
Does The Fed Still Matter? Bonds sold off overnight as the reality of Trump's victory became apparent. Traders more or less nailed the trading levels right out of the gate. This didn't leave much room for volatility during domestic hours (10yr yields started the day around 4.45 and are ending around 4.43). Given the all-consuming focus on the election, it would be easy to overlook the fact that Thursday brings the next Fed announcement (it would normally be on a Wednesday, but some smart person pushed it back a day). Does that even matter in this environment? Frankly, probably not too much. At the very least, the market is 100% prepared for a 0.25% rate cut. The statement and Powell will both likely acknowledge improvements in economic data--especially the big shift in NFP--while at the same time reminding the market that the Fed is playing a long game and not to read too much into one month of data. Econ Data / Events S&P Services PMI 55.0 vs 55.3 f'cast, 55.2 prev ISM Services 56.0 vs 53.8 f'cast, 54.9 prev employment 54.0 vs 48.0 Prices 58.1 vs 58.0 Market Movement Recap 08:11 AM Sharply weaker following Trump victory. MBS down 5/8ths of a point. 10yr up 16bps at 4.44 01:06 PM Recovering a bit, both before and after 30yr auction. MBS down half a point and 10yr up 13.6bps at 4.418 02:27 PM Giving up some ground again. MBS down 17 ticks (.53) and 10yr up 16bps at 4.442 04:11 PM Leveling off into the last hour. MBS down 15 ticks (.47) and 10yr up 15bps at 4.434Source: Mortgage News Daily | 6 Nov 2024 | 10:29 pm