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Posted To: Pipeline PressWe’re in the middle of mortgage conference season. (Are there any apple orchards left with all the applewood smoked bacon served at breakfasts?) The MBA’s National Conference begins Saturday – yes, nearly every conference eats into the weekend – and attendees will be watching the LTV (lender to vendor) ratio. Plenty of vendors are merging or partnering, raising money, offering new products – lots of news below. And in legal news, there’s even an app that lets people sue anyone! Great – just what we need, huh? Lender Products and Services Royal Pacific Funding (RPF) is offering its broker partners more value to their borrowers. RPF will apply a credit at closing for your borrower equal to a free appraisal (up to $500) on all purchase and refinance transactions…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Posted To: MBS CommentaryRemember last Wednesday? Rather forget it? Yeah, me too. That was the day that bond yields spiked last week. The size and speed of the move was out of line with any of the common explanations. These things happen, of course, and when they do, it’s best to focus on what’s true and to admit that no one should even be able to know why everyone is making every trade in any given market. Yet that’s exactly what tends to happen when volatility strikes the stock market. Today was the stock market’s turn to have its explanation-defying selling spree, and it made last week’s bond move look a bit tame by comparison. The financial media–respected or otherwise–had a field day with it. But it wasn’t the kind of field day that was fun and exciting. Rather, it was hard to watch …(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Posted To: Mortgage Rate WatchMortgage rates are based on mortgage-backed securities (MBS), which are essentially bonds. Conventional wisdom holds that stocks and bonds supplement one another, and that as “money moves in” to one side of the market, it will move out of the other. Conventional wisdom is super duper wrong! If conventional wisdom held true today, we would have seen a very big move lower in rates. The massive sell-off in stocks means there was a huge amount of cash looking for a new home. While it’s true that some of this cash did find its way into the bond market, the amount doesn’t even begin to compare. By the end of the day, the bonds most closely tied to mortgage rates had barely reentered positive territory. Due to the timing of the afternoon market volatility, many mortgage lenders were still showing…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Posted To: MND NewsWireIt was largely ignored with the ongoing rush of news from Washington, but late last month Senator Elizabeth Warren (D-MA) introduced a bill she says is aimed at increasing the amount of affordable housing , both for purchase and for rent. That bill, SB 3503, the American Housing and Economic Mobility Act, is now the subject of an independent analysis by Moody Analytics. Mark Zandi, Moody’s Chief Economist authored the report. Zandi notes that construction of high-end housing, both for purchase and rent, recovered first from the housing crises and that type of housing is now in oversupply in many urban areas. Construction of units that are affordable for lower- and middle-income households to rent or own however, has only recently begun to increase and they continue to significantly lag demand…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Posted To: MBS CommentaryOne of the most important themes I’ve tried to communicate over the past 2 weeks is that the bond market is in the middle of redefining or repricing its relationship with the available data. There was a chance that 10yr yields would try to avoid a big break up and over 3%, but that chance relied heavily on risks that haven’t materialized–at least not yet. If they materialize in the future, we’d likely see the positive effects on bonds at that time, but for now, here are a few of those unrealized risks: The trade war hasn’t crippled the global economy, and it may end up looking more like “tough talk.” The “renegotiation” of NAFTA is a poster child for this. Global markets can look at NAFTA 2.0 and conclude “that wasn’t so bad… I guess I didn’t…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Posted To: Pipeline PressAs Hurricane Michael heads toward Florida & Georgia (with the wind and storm surge, lenders and investors act – for example, Mr. Cooper has temporarily suspended loan purchases in several Florida counties effective today), contractors and builders are watching. Things aren’t rosy in that sector. DR Horton, for example, added to the housing unease with weaker than forecast sales. Home builder stocks have entered a bear market as interest rates continue to rise, tariffs have hurt the housing sector as higher building material costs from China negatively impact home builder margins, problems finding labor continue, the lack of raw, buildable land in some markets, along with the process and regulatory costs of building, first-time home buyers interested in the lower end of the market…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Posted To: MND NewsWireMortgage application activity declined during the week as the 30-year mortgage rate crossed the 5.0 percent line for the first time in seven years and other products moved to new seven or eight year highs. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measures of application volume, declined by 1.7 percent on a seasonally adjusted basis during the week ended October 5. On an unadjusted basis the index was down by 2.0 percent. The seasonally adjusted Purchase Index lost ground for the first time in six weeks , decreasing by 1 percent compared to the previous week, and was down by 1.0 percent on an unadjusted basis as well. The unadjusted version remained 2.0 percent higher than during the same week in 2017. The Refinance Index fell by 3.0 percent and the share of…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Posted To: MBS CommentaryToday was a freebie for bond markets (and stocks to some extent). In the grand scheme of things, no one will look back at today and conclude anything meaningful. If anything, it will just look like a very calm, very flat trading day following a 3-day weekend for bonds. Yields hit new 7-year+ highs in the overnight session, but early domestic traders were finally interested in owning bonds at current levels. Several big block trades hit the screen just before and after 8am ET, and these effectively set the tone for the rest of the morning. In the absence of data and despite a bounce in stocks (not that we should expect stocks and bonds to be moving in the same direction at the moment), bonds continued drifting toward their best levels of the day just after 11am. They stayed sideways in that…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Posted To: Mortgage Rate WatchMortgage rates recovered a small portion of their recent losses today, but the average loan applicant might not even notice. The 2 key ingredients of a mortgage rate (for the purposes of tracking their movement) are the rate itself (the “note rate”) and the upfront costs tied to that rate. The note rate and associated costs make up what many refer to as an “effective rate” (a number, expressed in interest rate form, that adjusts the actual note rate based on the implications of upfront cost changes. It takes big market movement to change note rates, largely because lenders tend to offer rates in 0.125% increments. As such, bond yields such as 10yr Treasuries need to be moving by about that much in order to see a similar change in mortgage rates. That was the case last week as 10yr yields moved…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Posted To: MBS Commentary2009-2013 was an unprecedented time for the US bond market. It benefited not only from the initial blast of the Great Recession and the sluggish recovery that followed, but also from the ongoing blast of Fed bond buying and ultra-low rate policy During that time, economic data only ever mattered inasmuch as it affected the Fed’s accommodation game plan. Even then, markets were 10 times more willing to trade the changes in the Fed’s gameplan than they were the data itself. The 2013 taper tantrum is a great example (the data all but guaranteed a tapering announcement as of May 3rd, but markets didn’t even begin to trade that notion until a May 10th Hilsenrath article suggested the Fed was getting ready to taper. And it wasn’t until Bernanke mentioned it on May 22nd that things…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.