Category: Mortgage News Daily

Posted To: MND NewsWireRemember the old Point/Counterpoint segment on CBS’s 60 Minutes? Two political commentators, a far right conservative and an equally lefty liberal argued the merits or lack of a current controversial issue. Two recent articles in the same issue of The National Review were reminiscent of that feature – except this was two conservatives arguing which parts of Ben Carson’s recent performance were more meritorious. They both had their points, and both managed to entirely overlook a singularly important one. The topic was the Secretary of Housing and Urban Development’s recently announced plan to combat the lack of affordable housing by taking on stringent local zoning and land-use regulations. The centerpiece article is written by Michael Tanner, a senior fellow at the Cato Institute. He mentions…(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 CommentaryDuration is a key variable in deciding value to bond investors investors. In fact, many investors have a duration target for their portfolio. Duration changes differently for MBS vs Treasuries, and this contributes to differences in relative performance (e.g. when you see MBS not gaining as much ground as Treasuries during a rally). A 10yr Treasury note will always have a 10yr duration (or more specifically, a predictably declining duration as time goes by). As rates rise, investors want less duration because they could get higher rates of return with newer debt. Whereas the duration of any 10yr Treasury note will be what it will be regardless of rising rates, the duration of the average mortgage would be getting longer (owners less likely to refi out of a below-market rate, and possibly even…(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 didn’t move much for the second day this week. Unlike yesterday, there was a relatively massive amount of volatility in underlying financial markets. This was especially true for stocks and the US Treasury market (which sets the tone for the broader bond market where mortgages operate). Even if we look specifically at mortgage-backed securities (MBS), we see some of the best gains this month. In fact, mortgage rates likely would have ended the day with more noticeable improvement if the gains had remained intact. Unfortunately , the strength began to erode in the late morning hours. Bonds had benefited from massive stock losses, but starting just after 10am, stocks began to bounce back while bonds weakened (weaker bonds = higher rates). Momentum kicked into higher gear later…(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 was boring and uneventful. Bonds seemed to be trying everything in their power to remain range-bound and avoid breaking out of the consolidation pattern we’d been tracking. By contrast, today’s bond market is unrecognizable –seemingly determined to break forcefully outside the consolidation pattern. There were significant gains overnight. As noted in this morning’s first update on MBS Live, these arrived hand-in-hand with heavy selling in stocks. The goal/challenge from here will be to convincingly break below the pivot point that we’ve been eyeing ever since we broke above coming in the other direction. 3.13% in 10yr yields is the line in the sand standing between us and more livable yields. Note: the chart above was snapped a few minutes before the last leg 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.

Posted To: Pipeline PressHistorically the FHFA, and with it Freddie and Fannie, announce official loan levels for the following year soon after Thanksgiving . (There are always rumors prior.) The loan limits are based on home prices around the nation. After 2008, despite the prices in many areas dropping, the Agencies did what they could to maintain stability. Prices in most areas have since rebounded, and so it is expected by many that we’ll see an increase in the conventional conforming loan limits. But there is noise out there of the FHFA scaling back its presence and market share. This may take the form of eventual cut backs on programs (should Fannie & Freddie support landlords buying non-owner houses?). Or will they cut high balance loan limits? Changes take a while, so stay tuned. Credit Changes – Lender…(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 CommentaryThe basic candlestick or bar chart that the average bond analyst uses to track 10yr Treasury yields is doing a good job of capturing the current opposing forces in rates. On the one hand , the combination of economic data, NAFTA 2.0, and Fed comments (among other things) makes a logical case for higher rates. This is easily seen as the pervasive series of “higher lows” over the past 2 months. On the other hand , doubts about the sustainability of lofty economic numbers and doubts about the market’s ability to thrive with 10yr yields over 3.25% make a case for support. This can be seen in the less-developed series of “lower highs” leading back from the long-term high 2 weeks ago. The result is the typical triangle–a consolidation pattern where the higher lows and lower…(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 PressResidential mortgage bankers are notoriously bad at actually retiring. They usually seem to come back as teachers, consultants, remodelers, etc. But plenty of people do retire, and per U.S. News the #1 place to retire is… Lancaster, PA ? Bring a sweater. Legal news Eagle Home… Universal American Mortgage Company, LLC, based in Miami and operating as a subsidiary of Lennar Corporation, has agreed to pay the United States $13.2 million to resolve allegations that it violated the False Claims Act by falsely certifying that it complied with FHA mortgage insurance requirements in connection with certain loans. “…between January 1, 2006, and December 31, 2011, UAMC knowingly submitted loans for FHA insurance that did not qualify. The United States further alleged that UAMC improperly incentivized…(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 didn’t move much today. Lenders who made changes to Friday’s rate sheets generally did so toward slightly higher rates. Actually, it would be more precise to say those lenders raised upfront costs associated with any given rate. This is typical on days where the broader rate market is slightly weaker, but not weak enough for mortgage lenders to adjust mortgage rates by the standard 0.125% increment. In the bigger picture , this leaves the average lender quoting conventional 30yr fixed rates of roughly 5% on top tier scenarios. There were no major developments or economic reports to move the bond market (which underlies rates) today. The rest of the week is on the light side as well, but things pick up on Thursday and Friday. Loan Originator Perspective Bond markets slumbered…(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 CommentaryAs of October 16th, we’d been tracking the most recent consolidation in bond yields (and stocks for that matter) waiting for a breakout to suggest the next dose of momentum. Stocks broke higher with conviction while bonds merely trickled sideways. Still, they’d technically broken the consolidation, thus implying more momentum toward higher rates. By the end of the following day, it showed up as 10yr yields moved back over 3.2%. That began a 2nd, bigger, broader consolidation pattern–the one we’re currently tracking (discussed in the Day Ahead ). Much like the previous pattern, the current consolidation is set to run out of room no later than Wednesday of this week. It took an exceptionally calm day today in order for bonds to remain inside the lines. If there’s an indication…(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 CommentaryWe’ve talked a bit (in this commentary and in the live chat on MBS Live ) about the similarities between the October sell-off and one seen in April/May 2018. Both took yields to what were, at the time, the highest yields in years. Both examples have an initial spike followed by several weeks of narrower trading with a trend-line of “higher lows” being the most noticeable feature during those weeks. As you can see in the following chart, that’s the phase that we’re currently in (those “weeks of narrower trading with a trend-line of higher lows”). If October ends up like April/May, the there’s another spike left to come. The lines along the bottom of the chart are fast and slow stochastics–momentum indicators. The move in May 2018–where both are heading lower…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.