Mortgage News Daily

  • Posted To: MBS Commentary

    If you are an MBS Live member, today's recap has already been written in this update and in The Huddle . Non-MBS Live members can get a pretty solid idea from the free mortgage rate article HERE . For those who don't like to click links, suffice it to say that the upper range boundary that we've been paying so much attention to ended up being the key ingredient in today's movement. Technical ceilings in rates can either serve to motivate follow-through selling when broken, or they can serve as a cue for buyers to get back in the market and push rates back into the range. Today saw the former. 10yr yields were as high as 2.897% just after the Philly Fed data (much stronger than expected). But buyers were waiting and had already made their presence known after overnight highs...(read more)

    Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

    Created: 7/19/2018 1:02:04 PM
  • Posted To: Mortgage Rate Watch

    Mortgage rates had a scare today, as they began the day at their highest levels of the month (depending on the lender) only to fall back in line with yesterday (or better!). The reason for the back-and-forth movement has to do with esoteric behind-the-scenes stuff in the bond market. I should be able to make it tangible enough for you, so let's give it a shot. Bonds are the backbone for all interest rates. The bonds that underlie mortgages tend to move almost exactly like 10yr Treasury yields. Treasuries are a great case study to follow when it comes to rates because they are abundant, more actively traded, and essentially risk-free. That risk-free part is important because it means Treasuries can be used as a benchmark to assess the value of other bonds that aren't guaranteed by the full faith...(read more)

    Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

    Created: 7/19/2018 11:53:00 AM
  • Posted To: MND NewsWire

    A group of financial experts is scheduled to meet at on Thursday to make funeral arrangements for Libor . In case you hadn't heard, the London interbank offered rate, the number that indicates how much one bank needs to borrow from another, is not expected to survive much beyond the end of the decade. All good, or even not so good, things must come to an end, and Libor has had moments of each, but Matt Phillips, writing in the New York Times, says the problem is that the financial world, going into the meeting at the Federal Reserve of New York, hasn't figured out what to do if/when Libor breathes its last. While most of this country has no clue about Libor, few are untouched by it. It is the basis for interest rates on huge corporate loans , private student loans, and for resetting rates on...(read more)

    Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

    Created: 7/19/2018 8:50:36 AM
  • Posted To: MND NewsWire

    Yet another federal court has rebuffed shareholders hoping to recover some value from their investments in the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. A three-judge panel for the Fifth Circuit (Texas) Court of Appeals refused to stop the practice of net worth sweeps required of the GSEs, but, the plaintiffs, whether their intention or not, did succeed in getting the structure of the Federal Housing Finance Agency (FHFA) ruled unconstitutional. FHFA v Collins was an appeal of a suit filed by GSE stockholders J. Patrick Collins, Marcus J. Liotta, and William M. Hitchcock in October 2016. It was the latest in a long stream of lawsuits against the government regarding its 2008 seizure of the GSEs. The original suit named FHFA and its current director Melvin H. Watt and...(read more)

    Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

    Created: 7/19/2018 8:07:06 AM
  • Posted To: MBS Commentary

    This primer (and this one , and this one ) will be useful for digesting the following, if you haven't read it before. For those paying any sort of attention to trading levels in bond markets over the past few weeks, it's hard to miss the super narrow range between 2.825 and 2.885 in 10yr yields. That's been perfectly intact since June 27th, and was broken for the first time in today's overnight session. In the chart above, there are plenty of causes for concern in terms of the technical implications of recent moves: Mid-Bollinger (middle yellow line) is broken 2.885% was broken overnight short-term momentum hasn't been oversold enough (above upper blue line) to imply support longer-term momentum has plenty of room to run (empty space between current levels and oversold)...(read more)

    Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

    Created: 7/19/2018 6:18:37 AM
  • Posted To: Pipeline Press

    “Rob, are you hearing, now that the CFPB is perceived to have lost its teeth, that some lenders are providing their loan officers two different rate sheets?” Unfortunately, yes, I am hearing that, but hopefully it is an untrue rumor. It would certainly fly in the face of fair lending and would give another black eye to our industry. See note below from The Knowledge Coop’s Ken Perry regarding compliance issues on this. (By the way, the Bureau of Consumer Financial Protection has announced the appointment of Paul Watkins to lead the Bureau’s new Office of Innovation, and a confirmation hearing for Kathy Kraninger, President Trump’s pick to lead the CFPB, is scheduled today before the Senate Banking Committee.) Upcoming Events and Training Now is the perfect time...(read more)

    Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

    Created: 7/19/2018 6:13:49 AM
  • Posted To: MND NewsWire

    The share of closed loans for home purchases ticked up another point in June, to 71 percent. While Ellie Mae has only tracked data since 2011, this represents a new high for those loans in the company's Origination Insight Report. The purchase share was also up 1 point for FHA loans, at 81 percent and rose 2 points for VA loans and 3 for conventional loans to 77 percent and 69 percent respectively. The allocation of newly originated loans across product types seems cast in amber. Shares have remained essentially unchanged since March at 66 percent conventional, 20 percent FHA, and 10 percent VA loans. In June, the 30-year interest rate rose yet again to 4.9 percent, up from 4.84 in May another new high for the Ellie Mae report. The percentage of Adjustable Rate Mortgages (ARMs) rose to 6.9...(read more)

    Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

    Created: 7/19/2018 5:56:57 AM
  • Posted To: MBS Commentary

    After holding the same sideways range since June 27th, 10yr Treasury yields finally knocked on the 2.88+ ceiling for the 2nd time (the previous attempt being July 3rd). But that's about as exciting as I can make today sound. The overall move higher in yields was less than 2bps, and volume was exceptionally low. If anything, the challenge of the range ceiling (failed challenge, really) was the product of serendipitous afternoon tradeflows amid highly illiquid trading conditions. Today's economic data and Fed Chair testimony did little, if anything, to motivate trade. Whereas the afternoon was an illiquid desert for bonds, the morning hours were only slightly better. Still, the morning at least had a clear source of inspiration in the form of European bond market movement. Treasuries...(read more)

    Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

    Created: 7/18/2018 2:44:30 PM
  • Posted To: Mortgage Rate Watch

    Mortgage rates were flat again today, further prolonging a trend that's been in place for weeks. During that time, we've seen modest ups and downs, but no significant changes. To put the narrowness of the range in context, the "ups and downs" are only seen in the upfront costs associated with any given mortgage rate. Rates themselves haven't changed for the average loan scenario. Today's absence of change belies market movement to some extent. The bonds that underlie mortgage rates weakened enough through the course of the day that mortgage lenders were nearly justified in a mid-day rate sheet adjustment (for the worse). When this happens (i.e. when bonds weaken, but not quite by enough to prompt mid-day changes), the implication is that tomorrow starts out at a slight disadvantage . In other...(read more)

    Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

    Created: 7/18/2018 1:57:00 PM
  • Posted To: MND NewsWire

    It is the largest generation in U.S. history and Millennials may also set a record as the one whose behaviors have been most heavily researched. Despite the hours of study and pails of ink, the direction the generation's members will ultimately take in their lives still has the nation a bit flummoxed. This may especially be true of their decisions about shelter. The Urban Institute (UI) just completed another large study on young adults born between 1981 and 1997. That, compared to earlier generations, they are more tech-savvy, racially and ethnically diverse, better educated, and marry later in life, explains some but not all of their performance to date as homeowners. The UI team* finds that the 37 percent rate of homeownership within the generation in 2015 was lower than both of the preceding...(read more)

    Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

    Created: 7/18/2018 1:29:13 PM
  • Posted To: MND NewsWire

    All three measures of residential construction activity performed poorly in June , and the two most closely watched numbers, construction permits and housing starts, fell short of their June 2017 numbers. Despite the monthly and year-over-year declines, the U.S. Census Bureau and the Department of Housing and Urban Development report that activity in the first half of 2018 is still ahead of the same period last year. The worst numbers were for privately authorized housing starts. They failed to hold on to their gain in May, dropping 12.3 percent to 1,173,000 units. May's estimate of 1,337,000 units was revised down from the original 1,350,000. The June estimate fell below the June 2017 pace by 4.2 percent. The results didn't come close to meeting expectations. Analysts polled by Econoday had...(read more)

    Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

    Created: 7/18/2018 7:26:04 AM
  • Posted To: MBS Commentary

    Fed Chair Powell will deliver round 2 of his congressional testimony today, this time at the House FSOC (yesterday was with the Senate Banking Committee). There's no reason to expect today's House session to be any more of a market mover than yesterday's Senate version. In fact, the 2nd day of testimony almost always tends to be ignored relative to the 1st day, though there are a few exceptions. Perhaps more interesting for bonds right now is the fact that momentum is at risk of shifting negatively in the event of any additional weakness. As seen in the following chart, yields have backed up to their middle bollinger band (a technical study with a 21-day moving average as the middle line with outer lines that are 2 standard deviations higher and lower). Breaking above the middle...(read more)

    Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

    Created: 7/18/2018 6:46:12 AM
  • Posted To: Pipeline Press

    “Your loan officer should be given the opportunity to succeed elsewhere.” Ever heard a CEO recommend that to a branch manager regarding a poorly performing LO? Here in San Francisco, at the Western Secondary Conference, the talk is focused on secondary marketing and Fannie’s lower estimate of 2018’s volumes ($1.69 trillion). But LO performance and compensation creep into the conversation any time you have owners and CEOs in one room. Recently I wrote , “No one wants to be ‘the first penguin in the water’ when it comes to making LO compensation changes. But done the right way, these changes can have a very positive impact on an independent’s bottom line and chances of survival.” Lenders are heading toward taking LO comp monies and putting...(read more)

    Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

    Created: 7/18/2018 5:53:53 AM
  • Posted To: MND NewsWire

    Refinancing made a tiny bit of a comeback during the week ended July 13. Both the Refinancing Index, a component of the Mortgage Bankers Associations (MBAs) Market Composite Index, and the share of applications that were for refinancing regained some ground after retreating during the previous three weeks. The overall Composite Index, a measure of mortgage volume, declined by 2.5 percent on a seasonally adjusted basis, giving back all of its gains from the prior week . On an unadjusted basis the index was up 22 percent from the week ended July 6 due to the adjustments made by MBA to account for the Independence Day holiday. The Refinance Index increased 2 percent from the previous week and 36.5 percent of applications received were for refinancing. The prior week refinancing had a 34.8 percent...(read more)

    Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

    Created: 7/18/2018 5:08:06 AM
  • Posted To: MBS Commentary

    Fed Chair Powell fielded questions from the Senate Banking Committee today as a part of the 2-day semi-annual congressional testimony often referred to as the Humphrey Hawkins address. These testimonies have plenty of street cred based on past examples where they've caused big market movements. The difference between then and now is that markets don't have much to learn from the Fed. In other words, there's not much room for off-the-radar surprises. Today's market reaction bore that out. A few bond bulls were positioned for Powell to say something dovish. When he didn't, there was a quick, shallow, negative reaction, followed by a sideways grind that kept longer-term bond near unchanged levels. Shorter-term bonds continued to lose ground, because that's what shorter...(read more)

    Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

    Created: 7/17/2018 2:18:41 PM
  • Posted To: Mortgage Rate Watch

    Mortgage rates were generally unchanged today, prolonging an exceptionally flat trend. Over the past 3 weeks, the average mortgage seeker will not have seen a change in the interest rate attached to their loan. Changes have come instead from the upfront costs associated with any given rate, which can move in smaller increments than rates themselves (mortgage lenders tend to break up rates by eighths of a percentage point). The lack of movement isn't for a lack of potential movement in underlying bond markets. That said, "potential" is the operative word, and it went unfulfilled by today's data and events. Given that today's biggest calendar event was Fed Chair Powell's congressional testimony, there's little reason to assume tomorrow's installment (with the House instead of the Senate) will...(read more)

    Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

    Created: 7/17/2018 1:36:00 PM
  • Posted To: MND NewsWire

    As analysts had expected, the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) remained at 68 this month. The reading still indicates a strong level of builder confidence in the new home market, but the HMI has been relatively static for months, moving within a two-point range, 68 to 70, since March. NAHB surveys its new home building members monthly on their attitude toward the market. They are asked to grade their perceptions of the current market and the market they expect over the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates...(read more)

    Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

    Created: 7/17/2018 7:47:45 AM
  • Posted To: MND NewsWire

    The National Association of Home Builders (NAHB) has plucked more information from the Census Bureau's Survey of Construction (SOC), this time to paint a portrait of the state of residential permitting nationwide. Danushka Nanayakkara-Skillington writes in NAHB's Eye on Housing blog that permits for single-family construction issued during the first five months of the year were up by 8 percent over the same period in 2017. The National Association of Home Builders (NAHB) says the nationwide total for the period is 363,327 compared to 336,410 for the year-to-date (YTD) through May 2017. The activity however, was skewed toward the West and the South. Permits were issued at a similar seasonally adjusted annual rate in May of 363,700, an 8.6 percent year-over-year increase. The Bureau will issue...(read more)

    Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

    Created: 7/17/2018 7:02:15 AM
  • Posted To: MBS Commentary

    Fed Chair Powell begins 2 days of semi annual congressional testimony today with the Senate Banking Committee at 10am. In recent years, this testimony has devolved into laughable political theater, mostly. That said, today's has a few redeeming qualities. First off, the Senate session tends to be slightly less theatrical than the House version coming up tomorrow. Beyond that, we know from Powell's previous congressional appearances that he tends to navigate the political posturing with more grace than Yellen--something that tends to help move the legislative blowhards through their grandstanding more quickly. Finally, despite all the theater, the fact remains that this is a venue for the Fed Chair to answer unscripted questions. Therefore, there will always be big market movement potential...(read more)

    Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

    Created: 7/17/2018 6:47:12 AM
  • Posted To: Pipeline Press

    “What can be asserted without evidence can also be dismissed without evidence.” While you ruminate on that one, there continues to be evidence and reminders that potential home buyers are having trouble coming up with “skin in the game,” aka, a down payment. It would take an average of 36 years for someone earning the median income in D.C. to save for a 20% down payment on a median-priced house, according to a recent report from U.S. Mortgage Insurers. Still, try being a teacher in San Francisco earning $70k/year saving up for a median-priced $1.6 million home. Capital Markets Rates? Every day, a little up, a little down , although many days borrowers wouldn’t notice the difference on rate sheets. Yesterday they went up a little bit as bond prices dropped (there’s...(read more)

    Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

    Created: 7/17/2018 5:52:10 AM
  • Posted To: MBS Commentary

    Summertime Mondays are notorious for light volume and seemingly random trading. Today was a slightly more active than normal in that regard, largely due to the presence of top tier data (Retail Sales) and a geopolitical event in the form of the Trump/Putin summit. The latter was never expected to offer any major revelations, but the former is always capable of delivering some bond market momentum. Bonds were just slightly weaker heading into the Retail Sales numbers. The weakness continued after the report came out stronger than expected. But wait! It was 0.5 vs 0.5, so how was it stronger than expected? The key difference was in the revision to last month's report (previously 0.8 but now 1.3%). The "core" sales reading was also revised higher. Additionally, several GDP estimates...(read more)

    Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

    Created: 7/16/2018 2:52:27 PM
  • Posted To: Mortgage Rate Watch

    Mortgage rates fell to their lowest levels since late May as of last Friday. Today, then, would be the 2nd best day since late May. Rates edged slightly higher to begin the new week as bond markets (which underlie rates) came under modest pressure for several relatively inconsequential reasons. The net effect was a small adjustment in the upfront costs associated with prevailing rates. In other words, the actual interest rate governing your monthly mortgage payment hasn't changed in weeks, but the upfront costs tied to that rate are slightly higher for lenders today compared to last Friday. Loan Originator Perspective My clients and i continue to favor locking in once within 30 days of closing. Only loans i would consider floating would be those that can lock on a shorter time tomorrow or if...(read more)

    Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

    Created: 7/16/2018 1:11:00 PM
  • Posted To: MBS Commentary

    This is the off-season for bonds, but they still have to show up for the game every day. The coaching staff (aka the traders turning the cogs of the underlying bond market) have been running the same play every day since June 27th . It's a play that's been working on both offense and defense, thus providing an easy button for the entire team (even if it's also a "boring button"). No one gets hurt, and no one has a ridiculously good time--typical off season. So what's the play in question? Simply put, bond market players have been tasked each day with playing harder and harder defense whenever yields rise toward 2.88. On offense, they only push hard enough to get yields to 2.825, as seen on the following chart with numerous bounces on the lower teal line. I included...(read more)

    Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

    Created: 7/16/2018 6:05:26 AM
  • Posted To: Pipeline Press

    When Costco rolled out its mortgage option to members, many lenders were very concerned. But despite great potential, Costco/First Choice has not become the #1 lender in America. I heard something interesting last week: Costco doesn’t make much money selling products, it makes all profits from membership fees . Despite Bank of America’s great quarterly results this morning, lots of lenders aren’t making much money selling their products either, unfortunately, and the number of residential lenders who haven’t adjusted their headcount, compensation plans, or business models in reaction is dwindling . (The latest example is job cuts at State Farm .) If a branch or channel hasn’t been profitable for a while, ask what’s going to happen, if anything, to reverse...(read more)

    Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

    Created: 7/16/2018 5:50:44 AM
  • Posted To: MND NewsWire

    Despite complaints about labor, lot, and material shortages, builders needed no more time to build a home last year than they did in 2016. The time did increase compared to 2015 by about two weeks. Using data from the Census Bureau's Survey of Construction (SOC), the National Association of Home Builders (NAHB) concludes that the average time to build a single-family house was 7.5 months. The actual building time was about 6.5 months following a typical delay of around 30 days after the permit was authorized. Data from the 2015 survey showed the time from permit to completion at 7 months. The range however is wide, from less than a month to more than 6 years. Much depends on who is building the house, for what purpose, and where. , writing in NAHB's Eye on Housing Blog, says that houses built...(read more)

    Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

    Created: 7/16/2018 5:14:24 AM