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Posted To: MBS CommentaryBonds had a couple options to choose from today when it came to potential market movers. As far as known quantities, we knew there would be a speech from Fed Chair Powell (maybe he would clarify last week’s inflation comments?) and also a big corporate bond deal from Comcast. Neither of the ‘on-the-radar’ events had much of an impact. Maybe they would have had it not been for a moderate dose of Italian drama setting the tone in the overnight session. Simply put, the head of the budget committee in Italy’s lower house of parliament said Italy could only solve its problems if it left the Eurozone (i.e. just dropping the currency, not the membership in the EU). This resulted in a fairly noticeable rally in core European bond markets which then spilled over into US markets. It wasn’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: Mortgage Rate WatchMortgage rates fell modestly today, and thus managed to avoid heading any closer to the 7-year highs just overhead. Underlying bond markets benefited from concerns about Italy’s stance on the Euro currency based on one Italian official’s comments. Those were later characterized as “just one man’s opinion,” thus not having a big, lasting impact on rates. To understand what’s going on here, first consider that interest rates are based on supply and demand in the bond market. The more that investors want to buy bonds, the lower rates go. When something threatens the stability of some major world economy (like the European Union could be somewhat threatened by Italy moving back to its own currency), investors tend to buy more bonds of safer haven countries. Ultimately, the European news wasn’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: MND NewsWireTwo Zillow subsidiaries are estimating it will cost the average U.S. homebuyer $40,000 to get in the door of their new home. Depending on where the home is located, according to a new analysis from RealEstate.com and Thumbtack, the number could be $26,641 (in Cleveland) or $202,834 (San Jose.) That headline number however is a little misleading. The study looked at the one-time fees that homebuyers can expect as they close and move into those homes, and the largest chunk is, of course, the downpayment . In their analysis the two companies estimated the amount needed for a 15 percent downpayment on a typical U.S. home ($32,700 in July 2018) plus additional costs. First there are closing costs, including the origination fee, appraisal, transfer taxes, title insurance, the first year of homeowners…(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 Press“Stay away from negative people. They have a problem for every solution.” There are plenty of folks out there reminding lenders of the seasonality of residential lending. But in places like Phoenix lenders look forward to winter since it’s their peak season. On the lending side, do you work for a non-depository lender? Or compete with one? If so, and I’ve mentioned this before, you may want to read this research piece on the risks, and strengths and weaknesses, of non-bank lenders . Hint: watch out for rising rates and declining home prices – which is exactly what we’re seeing in some areas. But knowing the risks is critical to reducing them. Upcoming Events The impact of Hurricane Florence continues. According to CoreLogic, flooding and wind destruction…(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 CommentarySo there’s this sideways trading range, and we’re waiting for bonds to break out. The end… Seriously though! It’s really that simple . We’d been in a range of 3.06-3.09, for the most part, in the last week and a half of September, but thought SURELY there would be no way to remain in that range after the much-anticipated Fed announcement last week. As it happened, Fed day was only able to catalyze a tentative break below 3.06–one that didn’t even materialize until Friday morning. To make matters more frustrating, bonds spent the entirety of Friday moving back up into the previous range. Yesterday saw the weakness continue, nearly to the point of reaching the upper boundaries (in fact, yields were as high as 3.095% in the overnight hours). Now today, we’re starting…(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 NewsWireThe take-away from CoreLogic’s report on its August Home Price Index is that home price appreciation during the month was the slowest in two years . The national index was up 0.1 percent compared to July while the year-over-year gain, while also indicating a slowdown, was still a strong 5.5 percent. Price gains were highest by a huge margin in Nevada with a 13.0 percent annual increase. Washington State prices rose 9.1 percent and in Utah the increase was 8.9 percent. Five other states posted gains of 7 percent or more including one surprise entry, West Virginia. “The rise in mortgage rates this summer to their highest level in seven years has made it more difficult for potential buyers to afford a home,” said Dr. Frank Nothaft, chief economist for CoreLogic. “The slackening in demand is reflected…(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 CommentaryAfter slogging up toward (but not over) long-term highs 2 weeks ago, 10yr yields began a waiting game that looked like it would take a cue from last Wednesday’s FOMC events. As bonds rallied coming away from the Fed, there was at least some chance that we’d turned a corner and could start thinking about a more sustained rally. Friday afternoon’s weakness r aised some doubts as to that potential rally, and today’s weakness confirmed those doubts. Bonds are right back in the same range, holding uncomfortably near the highest levels in 7 years set back in May 2018. There were no specific, overt sources of inspiration for today’s selling pressure. Granted, we could point to Canada joining NAFTA 2.0 or another strong reading in ISM Manufacturing (weaker than expected, but still…(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 WatchAfter hitting the lowest levels in exactly 2 weeks on Friday, mortgage rates bounced back up toward their recent highs today. This risk was already taking shape by Friday afternoon as the bond markets that underlie mortgage rates had deteriorated throughout the day. When bonds weaken enough during any given day, mortgage lenders are at risk of ‘repricing’ (revising the day’s original rate sheet, effectively raising rates). Even if bonds had merely held steady overnight, lenders still would have been forced to raise rates a bit today. But bonds managed to lose even more ground overnight, thus making for a more noticeable increase in rates compared to Friday afternoon. The net effect is that the average lender is now somewhere between the 2-week lows seen on Friday and the 7-year highs seen 3…(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 NewsWireThe total value of construction put in place during August only ticked up 0.1 percent compared to July, but the small, steady increases each month have now put spending up 6.5 percent compared to August 2017 . The Census Bureau put the seasonally adjusted annual rate of spending in August at $1,318.5 billion. The July estimate was 1,317.4 billion and the prior August it was $1,237.5 billion. On a non-adjusted basis there was $122.0 billion spent during the month, compared to $122.0 billion in July. Year-to-date (YTD) expenditures are also up significantly from last year. During the first eight months of 2017 there were $818.8 billion expended; spending during the same period this year totals $862.0 billion, an increase of 5.2 percent. Privately funded construction expenditures in August were…(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 CommentaryBelieve it or not, any given month stands a better than average chance to convey some sort of theme for bond trading. In other words, there tends to be a discernible bias higher, lower, or sideways. It’s uncommon to see all 3 biases in the same month. August and September were quite clear in this regard. August was good. September was bad. Now that September is over, we’re well within our rights to wonder if October will keep the bad times rolling or offer reprieve. Given that yields had been very near long-term highs and that momentum indicators suggested a potentially friendly bounce, it’s fair to hope for a friendly October. Unfortunately, if the first few hours of the month are any indication, we may find life isn’t always fair. The saving grace so far is that the weakness…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.