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Posted To: MBS CommentaryRemember the flat, boring range between 2.8 and 2.9? Or perhaps you prefer the slightly stricter version between 2.82 and 2.88? That’s the range that dominated our conversation and bond trading beginning in late June. The range went on vacation through early August, but has been back in town for more than 3 weeks now . Any strength in bonds today would easily keep the range intact. As the chart suggests, the bounce in longer-term momentum (slow stochastics) is bad news, but it requires some qualification. While it’s true that bonds tend to have more red days than green days after such bounces, the first 3 days of this week count, and sometimes the bounces are shallow enough that we wouldn’t necessarily need to see too much more weakness before the next reversal in momentum. Beyond…(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 ended up being the most uneventful day of the week in terms of outright volatility. In other words, bonds didn’t cover as much ground as they did over the past 2 days. That said, there was still a bit of excitement . After being unchanged in the overnight session, yields began to rise toward the top of the prevailing range. Blame a combination of European bond market weakness and domestic stock market strength. Stronger GDP data didn’t help, but it’s debatable whether or not it hurt. If bonds were interested in data, they likely wouldn’t have continued selling off after the weaker Pending Home Sales report–especially given the Fed’s mention of the housing market last week. All it took to turn the ship around was for European markets to close. After that, the healing…(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 were just slightly higher again today, keeping them in line with the highest levels in about 3 weeks. The same caveat applies: we’re talking about “effective rates” (which factor in upfront lender costs) as opposed to “note rates” (the actual interest rate that most of us have in mind when discussing mortgage rates). In other words, most prospective borrowers are seeing the same old rate on any given day over the past 3 weeks, but the overall cost of financing, on average, would be highest today. Loan Originator Perspective Bonds lost ground for a third straight day today, as month end demand failed to provide support. Looks like our little rate dip has passed. I am locking new applications closing within 45 days for all but the most risk-tolerant clients. – Ted Rood, Senior…(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 NewsWireEarlier this month the National Association of Home Builders’ (NAHB’s) Eye on Housing blog featured a story on America’s aging housing stock. NAHB analyst Na Zhao used 2016 American Community Survey (ACS) data to put the median age of owner-occupied homes at 37 years compared to a median age of 31 years in 2005. The aging trend had picked up speed during the Great Recession. Zhao says the age of the housing stock is an important indicator for home remodeling as older houses are less energy efficient than new construction and ultimately will require remodeling and renovation lest they fall into disrepair and out of the housing inventory. Now the author takes another and more granular look at the issue and finds noticeable variations in the median age of housing across the states. New York has…(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 NewsWireExpectations weren’t particularly high for a solid July report on home purchase contracts, but today’s report from the National Association of Realtors® (NAR) didn’t meet even those . NAR’s Pending Home Sales Index (PHSI) came in at 106.2, down from an upwardly revised (from 106.9) 107.0 in June, a decline of 0.7 percent. The decrease put the PHSI 2.3 percent behind its level in July 2017. It was the seventh straight month the NAR’s leading indicator for existing home sales has trailed on an annual basis. It would have been difficult for the results to fall outside of the wide range of estimates from analysts polled by Econoday. They ranged from a loss of 1.1 percent to a positive 1.0 percent change. However, the July index was well off the consensus which was for the index to remain unchanged…(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 CommentaryGDP is released 3 times over 3 months beginning on the month that follows the quarter in question. In other words, Q2 (April-June) is first reported in July. The first revision is reported today (it’s still August, right?). GDP always sounds like a big market mover, largely because it’s the broadest and, perhaps, most widely recognized economic indicator out there, but it’s breadth is its downfall in terms of relevance. Calculating and revising such a broad measurement requires time. It also sacrifices granularity and specificity relative to more focused reports. As such, GDP is already a very late report in its first (“Advance”) release. After all, we’re getting numbers from April, May, and June in today’s report. That was a long time ago when it comes to econ…(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 NewsWireIn the first quarter of 2018, independent mortgage banks and mortgage subsidiaries of chartered banks posted only their second period of financial losses in the ten years the Mortgage Bankers Association (MBA) has covered the issue. This week MBA was able to report better news. The Association’s Quarterly Mortgage Bankers Performance Report says respondents to its quarterly survey had a net gain of $580 on each loan they originated in the second quarter compared to a loss of $118 per loan in the prior period. The only other loss was in the first quarter of 2014 , $194 per loan. The average pre-tax production profit was 21 basis points (bps) in the second quarter of 2018, up from an average net production loss of eight bps in the first quarter of 2018, but down 24 bps from the second quarter…(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 surge in mortgage applications last week, fostered by a 6.0 percent increase in refinancing, was short-lived. Despite slightly lower interest rates, the Mortgage Bankers Association (MBA) reports that its Market Composite Index, a measure of applications received by lenders, has resumed its downward spiral, with volume decreasing for the 17th time in the last 22 weeks. During the week ended August 24 the total volume of applications was 1.7 percent lower than the previous week on a seasonally adjusted basis. The decline was 3.0 percent on an unadjusted basis. The Purchase Index was down 1 percent from the week ended August 17 on an unadjusted basis and 3.0 percent unadjusted. The unadjusted Purchase Index remained 3.0 percent higher than during the same week in 2017. The Refinance Index…(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 CommentaryYesterday’s bond market weakness introduced some risk of a technical shift back toward higher yields. Specifically, fast and slow stochastics (shorter and longer term momentum gauges) were simultaneously ‘overbought’ for the first time since April. Making things complicated was the fact that bonds were still showing some signs of resilience as they didn’t lose too much ground despite the surge to all-time highs in the S&P. Today proved to be too much for that resilience. The 8:20am CME open brought a noticeable imbalance of sellers vs buyers. Minutes earlier, Treasury Secretary Mnuchin commented on the potential for a trade deal with Canada by the end of the week as well as his lack of concern for the shape of the yield curve. Neither comment was bond friendly, but it would…(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 rose again today–this time more noticeably than yesterday–bringing them to the highest levels in more than 2 weeks. For most, however, that sounds a lot worse than it actually is. In fact, the interest rate at the top of a loan quote has a good chance of being the exact same as the any other time during the past 2 weeks. How does that work?! The catch is that the “note rate” (the one that is applied to the principal balance to determine monthly payments–the only rate most people talk or care about, generally) is only part of the equation. There are also upfront costs associated with any given rate. Those costs allow for finer adjustments. Those adjustments technically affect the “effective rate.” So while the interest rate might be unchanged in many cases, the cost of the…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.