Mortgage News Daily

  • Posted To: MBS Commentary

    It will come as no surprise that I feel the level of discussion about 10yr yields being at 3% is overdone at best, and misguided at worst. Actually, it's clearly overdone, so let's talk about how it's misguided by taking a quick inventory of a few fundamentals in play the last time rates crested 3% compared to those same fundamentals now. CORE CPI INFLATION THEN: 1.6-2.0 NOW: 2.1 AVERAGE (6-quarter) GDP READING THEN: 1.5-2.4 NOW: 2.6 (could be higher on Friday) STOCK PRICES THEN: S&P closed out 2013 around 1850 NOW: 2634 at yesterday's close FED POLICY STANCE THEN: Tapering announced, but reinvestments remained and rates were pinned at 0-.25 NOW: Reinvestments being tapered (more to come). Fed target: 1.5-1.75% and more hikes foreseen OTHER CENTRAL BANKS THEN: Europe had...(read more)

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    Created: 4/25/2018 6:33:54 AM
  • Posted To: Pipeline Press

    Amazon Web Services, the conglomerate’s cloud computing division, has announced AWS Blockchain Templates, which will compete with similar offerings from IBM and Oracle . “The Amazon product gives developers access to a choice of two preset blockchain frameworks, and its producers say it will streamline efficiency by reducing the need for third-party intermediaries.” There are plenty of rumors, and concerns from existing residential lenders, that Amazon is researching entering the residential mortgage space. How might an Amazon Mortgage operate? What competitive advantages might Amazon Mortgage have? There’s the blog post on the STRATMOR Group website: “Amazon in the Mortgage Jungle.” Digital, Tech, Digital, Tech… Eagle Home Mortgage , a subsidiary...(read more)

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    Created: 4/25/2018 6:22:56 AM
  • Posted To: MND NewsWire

    The volume of mortgage applications received during the week ended April 20 was largely unchanged from the previous week . The Mortgage Bankers Association's (MBA) said its Market Composite Index, a measure of that volume, ticked down 0.2 percent on a seasonally adjusted basis from one week earlier although it was 1 percent higher before adjustment. The seasonally adjusted Purchase Index was unchanged. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 11 percent higher than the same week in 2017. Refi Index vs 30yr Fixed Purchase Index vs 30yr Fixed The refinance portion of mortgage activity continued to retreat to new post-recession lows, accounting for 37.2 percent of the total received compared to 37.6 percent the previous week. It was the smallest...(read more)

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    Created: 4/25/2018 6:09:05 AM
  • Posted To: MBS Commentary

    After yesterday's somewhat hopeful leveling-off in bond yields, today served to drive home the point that hope is futile and only bad things are going to happen forever and ever. Well, at least that's how it felt today. To be fair, yields are only closing a few bps higher and they've managed to hold very close to yesterday in terms of intraday highs. In fact, today saw by far the smallest increase in intraday highs since the more serious selling began last week. In other words, there's still some room for hope. Just don't get too attached. From here on out, the presence of hope may have more to do with the incoming events. These get more serious tomorrow with the first reading of Q1 GDP, a 5yr Treasury auction, and the biggest day of earnings reports so far this year (by...(read more)

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    Created: 4/24/2018 1:56:09 PM
  • Posted To: Mortgage Rate Watch

    Mortgage rates moved somewhat higher again today, thus pushing them farther into the highest levels in more than 4 years. This isn't the result of anything that happened today, but rather an ongoing process whereby the bond market (which underlies rates) is coming to terms with big-picture, long-term headwinds mentioned in the bullet points at the bottom of this article. Whereas rates had leveled off and even improved somewhat during March and early April, they've quickly shown more volatile colors. Borrowers are definitely seeing rates that are an eighth of a point higher from last week and, in many cases, a quarter of a percentage point higher than 2018's best levels. Tomorrow brings several flashpoints that keep the volatility potential high. These include an important Treasury auction ...(read more)

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    Created: 4/24/2018 1:26:00 PM
  • Posted To: MND NewsWire

    New home sales continue to improve after grim reports in December and January. New home sales posted a solid gain in March, and revisions to the February data also resulted in a positive outcome during the month. Those sales, reported by the U.S. Census Bureau and the Department of Housing and Urban Development on Tuesday, bested analysts' expectations and put sales well ahead of those in 2017. Sales of newly constructed single-family homes were at a seasonally adjusted annual rate of 694,000 in March compared to the revised rate of 667,000 in February, a 4.0 percent increase. Even better, the revision to February numbers was significant, up from the original report of 618,000, originally reported as a 0.6 percent month-over-month loss. That number had been viewed as good news, after drops...(read more)

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    Created: 4/24/2018 8:24:00 AM
  • Posted To: MND NewsWire

    Both the Federal Housing Finance Agency (FHFA) and the S&P CoreLogic Case-Shiller reported on February home prices on Tuesday and both showed little moderation in the rate of appreciation. Case-Shiller's reported gains, in fact, appear to be growing larger. Case-Shiller's National Home Price NSA Index, covering all nine U.S. census divisions, was up 6.3 percent on a year-over-year basis. The annual gain in January was 6.1 percent. The non-seasonally adjusted index increased by 0.4 percent from February and it rose 0.5 percent after adjustment. Both composite indices increased their year-over-year results as well . The 10-City Composite rose 6.5 percent on an annual basis, one-half point greater than the December to January gain and the 20-City grew to 6.8 percent. It was 6.4 percent the...(read more)

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    Created: 4/24/2018 7:32:45 AM
  • Posted To: MBS Commentary

    You won't be able to avoid "3% 10yr Treasury Yields" this week. For starters, 10's have already hit 3.0033% today, but simply being close seems to have everyone inside and outside the industry talking. As is often the case when there's a big, obvious trend that hits/breaks a big historical level, the conclusion of most professionals and laypersons is that "rates will continue to rise." Such insight deserves one of these: "Rates are gonna rise" is the easiest call to make in a world where the Fed is hiking, QE purchases are abating, and the government is financing more spending by issuing more Treasury debt. There are other pressures, but these are the biggies. It's logical and normal to assume these things put upward pressure on rates. It's...(read more)

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    Created: 4/24/2018 7:25:00 AM
  • Posted To: Pipeline Press

    Where should a lender reduce expenses? I received this note from STRATMOR’s Jeff Babcock. “In our numerous conversations with client mortgage origination companies regarding necessitous cost cutting, the target is virtually always operations and fulfillment. Technology applications are generally justified based on operational efficiencies. Yet the MBA and STRATMOR Peer Group Roundtables (PGR) data over the last three years for Mid-Size Independents confirms that Fulfillment accounts for approximately 27% of direct production expense (average of about $2,000 per loan) while Sales costs run 73% (average of about $5,300 per loan). The real opportunity for achieving meaningful expense reductions clearly rests with the all-encompassing arena of sales functions. If a lender had been successful...(read more)

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    Created: 4/24/2018 6:12:37 AM
  • Posted To: MBS Commentary

    Have you ever seen someone randomly do something fairly awful/hurtful/aggressive, offer no explanation or apology, and then just leave the scene? That was essentially what bond markets did today. Friday's already unpleasant weakness was forcibly extended , bringing yields to the highest levels in more than 4 years during the overnight session (a feat that was nearly repeated during domestic hours). There were no new developments in the bond market world to justify such a turn of events. Still, it shouldn't come as much of a surprise if you've been reading this commentary. After all, last week was all about the "defeat of the friendly Springtime consolidation in rates." That defeat paved the way for the bigger-picture, longer-term selling trend to get back underway. Bottom...(read more)

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    Created: 4/23/2018 2:16:15 PM
  • Posted To: Mortgage Rate Watch

    Mortgage rates moved markedly higher today, officially leaving them at new 4-year highs. The only other time they've earned that distinction this year was in February--NOT last week as all the major surveys claimed. To be clear, they were certainly close last week, but the surveys didn't account for some of the worst individual days in February. Does any of this really matter? No, not so much. Here's what matters: The average lender is quoting very well-qualified borrowers with huge downpayments something north of 4.5% on conventional 30yr fixed mortgages today. Let's call it 4.625%. Up until Friday, that number hadn't been over 4.5% except for on a few of those ill-fated February days. Also important is the message that such a move sends. Simply put, the bond market (which underlies rates...(read more)

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    Created: 4/23/2018 1:49:00 PM
  • Posted To: MND NewsWire

    Freddie Mac's economists say, "The broader economic environment remains favorable for home sales," but they add a lot of caveats to that statement . Sales are holding up so far, despite the increase in mortgage rates, but will that continue? Sales started recovering in 2010, with the aggregate of new and existing sales growing annually except for 2014; largely because rates rose that year. Rates are not necessarily the only driver, however, from 2016 to 2017 home sales rose along with rates. Of course, sales depend on the interaction between demand- and supply-side factors. Demand factors include demographics, labor market outcomes, and financing conditions including rates and the availability of credit. Among supply factors are the construction of new homes, vacancy rates, and the inventory...(read more)

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    Created: 4/23/2018 11:09:14 AM
  • Posted To: MND NewsWire

    Existing-home sales seemed to have reclaimed their footing, posting their second consecutive gain after two straight months of declines. The National Association of Realtors® (NAR) said March sales of single-family homes, townhomes, condos, and coops rose 1.1 percent compared to February, putting sales at a seasonally adjusted annual rate of 5.60 million units. The March pace built on a 3.0 percent increase in February, but sales are still down 1.2 percent compared to March 2017 . Sales in February were at a rate of 5.54 million. Analysts polled by Econoday had expected existing home sales in the 5.39 to 5.80 range. The consensus was 5.51 million units. Single-family homes sales were up 0.6 percent to an annual rate of 4.99 million units from 4,96 million in February, putting those sales...(read more)

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    Created: 4/23/2018 7:56:58 AM
  • Posted To: Pipeline Press

    “A billion here, a billion there, pretty soon, you’re talking real money,” was never actually uttered by Illinois politician Everett Dirksen. ("Oh, I never said that. A newspaper fella misquoted me once, and I thought it sounded so good that I never bothered to deny it.") The big news late Friday was the CFPB & OCC announcing a settlement with Wells Fargo for auto-loan administration and mortgage practices – all lenders need adequate compliance or risk management programs, right? Wells Fargo said that the company would adjust its first quarter 2018 preliminary financial results by an additional accrual of $800 million, which is not tax deductible. According to the CFPB's consent orders, apart from paying the fine, Wells Fargo will remediate harmed consumers and undertake...(read more)

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    Created: 4/23/2018 6:12:15 AM
  • Posted To: MBS Commentary

    I'm going to be surly this week about the way the bond market is covered in the financial media. Many of the articles to which I take exception will appear in the live news stream on MBS Live and Mortgage News Daily. They are there for reference and/or "target practice," if you take my meaning. And I'm not talking about plinking cans in the 3rd grade at my buddy Tim's house (he had dirt bikes too!). I'm talking more like a heavy explosives demonstration. So please, stay behind the safety glass, put on your protective eyewear, and observe. Target 1: The Notion That High Rates Hurt Stocks: No matter how many times someone writes this in a news article--no matter how many times a talking head claims this on the TV--it never becomes true. I mean, I guess it could become...(read more)

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    Created: 4/23/2018 6:03:44 AM
  • Posted To: MBS Commentary

    10yr yields hit the highest levels in more than 4 years this afternoon as bigger-picture selling pressure looks to be taking the reigns back from the Springtime consolidation that helped rates hold steady-to-slightly lower in March. There are no big, obvious reasons for the sudden spike in rates. We're left to cobble together a narrative from boring, esoteric stuff like an "imbalance in trading positions," anxiety over the data, earnings, and bond supply next week, and the end of a few days of extra help from tax deadline retirement account funding. Or, if you'd like to go with fewer words , it's no less valid to say that technicals and momentum are the culprits. In other words, bonds were in a consolidation trend. They tested the ceiling, broke the ceiling, and have been...(read more)

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    Created: 4/20/2018 2:14:06 PM
  • Posted To: Mortgage Rate Watch

    Let's clear one thing up before we begin. Freddie Mac, MBA, and Ellie Mae all noted new 4-year highs in mortgage rates this week. They are all technically wrong. This has to do with the way their data is collected and/or averaged. And while I have no doubt that they are accurately conveying the results of their data collection efforts according to their methodology, there is a more accurate way to do things. Specifically, we can track actual lenders' rate sheets every day. Even if we take an average of that daily data, we still find that rates aren't quite back to 4-year highs just yet. Depending on the lender, these occurred on one of the days near the end of February. In fact, some lenders' rates from March 21st are still higher than today's. Are we talking about very big differences between...(read more)

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    Created: 4/20/2018 11:18:00 AM
  • Posted To: MND NewsWire

    Once again Wells Fargo is about to pay dearly for its inability to walk the straight and narrow. The Washington Post , under the byline of Renae Merle, is reporting that the bank is about to be hit with the largest penalty of the Trump administration , perhaps as early as today. A settlement, reported to be in the neighborhood of $1 billion, has been reached between wells and its regulators, the Consumer Financial Protection Bureau (CFPB), and the Office of the Comptroller of the Currency (OCC) over improprieties in both their mortgage and auto lending business. The Bank acknowledged last week that it faced a hefty fine. Neither regulator has commented on the matter to date. Wells Fargo has admitted to charging some customers improper fees to lock in their mortgage interest rates and to forcing...(read more)

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    Created: 4/20/2018 6:27:34 AM
  • Posted To: MBS Commentary

    Rates are in the midst of a serious, threatening move higher. Yesterday brought additional confirmation of the end of the friendly Springtime consolidation trend and it took us one step closer to the highest yields in more than 4 years. The specific reasons for yesterday's weakness were covered in the MBS Live Huddle , but even then, the bigger-picture justification for gradual weakness in 2018 is well-documented here and elsewhere (Treasury issuance, Fed policy outlook, upside growth/inflation risks). Rates could very well continue higher today--possibly even enough to break those pesky 4-year highs from back in late February. But even if they do, it might not be the end of the world. In fact, there are at least 2 recent examples of big scary rate spikes consolidating (like we did in March...(read more)

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    Created: 4/20/2018 6:20:58 AM
  • Posted To: Pipeline Press

    Did you know that Wells Fargo gives more assistance and aid to people and communities through its Foundation than any other company in the United States. For example, “the Wells Fargo NeighborhoodLIFT program looks to the future by delivering down payment assistance and financial education to homebuyers.” If only people focused on that, right? Not only did Wells tragically lose an employee in the Southwest Airline accident, but in a smack to the Retail Division the American Federation of Teachers notified Wells that it is dropping the bank as a recommended mortgage lender for the national education union's 1.7 million members. The press continues to talk about a settlement of a potential $1 billion fine, and by some specific measures other lenders have overtaken Wells’ volume...(read more)

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    Created: 4/20/2018 6:18:50 AM
  • Posted To: MBS Commentary

    The break outside what we'll call the "Springtime Consolidation" for bonds started taking shape as early as last week. On Thursday and Friday, yields hugged the upper boundaries of that trend, simultaneously shying away from the sort of positive bounce that would typically suggest the trend's continuation. No matter! Perhaps they just needed to think things over for the weekend and things would look different on Monday. Nope! In fact, bonds weakened on Monday, which just about put the nail in the coffin of the Springtime Trend, but Tuesday's resilience raised doubts. By yesterday, however, we probably had our final answer with the big break above 2.835% and even a modest break above 2.86% in 10yr yields. Today's overnight weakness was plenty to put a period at the...(read more)

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    Created: 4/19/2018 2:03:41 PM
  • Posted To: Mortgage Rate Watch

    Mortgage rates jumped higher today as bonds continued a move away from narrow Springtime range seen in March and early April. Bonds dictate rate movement and yesterday saw the bond market make its first convincing attempt to break what had been a friendly, narrow range. This of course coincided with a narrow range for rates in the past few months. It was also "friendly" relative to the trajectory seen in the first part of the year. When these sorts of ranges become established, the boundaries take on a special significance. As soon as the floor or the ceiling is definitively broken, there tends to be some additional momentum in the direction of the break. That's why yesterday's headline mentioned that bonds were suggesting "more trouble ahead." I'd hoped to be wrong about that, but here's the...(read more)

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    Created: 4/19/2018 1:35:00 PM
  • Posted To: MND NewsWire

    The Remodeling Market Index (RMI) is to home remodelers as the Housing Market Index (HMI) is to new home builders. Each is constructed by the National Association of Home Builders (NAHB) to reflect builder confidence in their particular share of the market. The quarterly RMI is based on responses to a survey in which professional remodelers are asked to gauge current market conditions in terms of major and minor additions and alterations , maintenance and repairs on both owner- and renter occupied dwellings. NAHB assigns a numerical value to those answers. They are also asked about calls for bids, work commitments over the next three months, work backlogs, and appointments for proposals. Those questions form the basis of the future indicators index. The overall market index retreated to its...(read more)

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    Created: 4/19/2018 11:57:59 AM
  • Posted To: MBS Commentary

    We've been increasingly wary about a potential break of the recent consolidation/rally trend --the one that saw yields move sideways to slightly stronger from late Feb through early April. Yields tiptoed to the top of that range as of Tuesday and then fired a more forceful warning shot with a bigger breakout yesterday. Today looks set to continue the destruction of the trend with sharp losses overnight. Where might this be going? With 2.86% breaking and 2.91% already being tested, there's really only the super-long-term highs at 2.95+ remaining. To see anything higher, we have to go back more than 4 years. If that breaks, there's not much overrun until we're looking at 2011's levels in the low 3's as the supportive ceiling. But let's slow down a bit. We'll cross...(read more)

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    Created: 4/19/2018 6:51:09 AM
  • Posted To: MND NewsWire

    The share of refinancing loans dropped to 38 percent of loans closed in March, down from 43 percent in February. Ellie Mae's Origination Insight Report for the month notes that the 5 percent decline in those loans was consistent across all three loans types, FHA, VA, and conventional. Refinancing slipped as the interest rate on 30-year fixed-rate mortgages rose to their highest level since January 2014. Ellie Mae said that the average rate on closed loans which had been at 4.33 percent in January and 4.48 in February jumped to 4.69 percent in March. The percentage of loans with adjustable rates (ARMs) increased to 6.3 percent from 5.5 percent the previous month. The distribution of loans across loan types was largely unchanged. The FHA share rose 1 percentage point to 20 percent while conventional...(read more)

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    Created: 4/19/2018 6:36:00 AM