Mortgage News Daily

Posted To: MBS Commentary

Don't get too excited. Despite a few close calls and false alarms, bonds managed to close below last Tuesday's highs for three days in a row. Now they begin the 4th day in slightly stronger territory. To an optimist's eye, the bond market is building a case for a ceiling bounce. One way to approach such potential bounces is to consider the implication of technical analysis. One of the more mainstream technicals for this purpose is the Bollinger Band study. It consists of 3 lines. The middle is typically set at a 21-day exponential moving average (or a 20-day simple moving average), with the outer bands typically set 2x standard deviations higher and lower. This results in a moving range that ends up encapsulating most of the trading that takes place in any given security. That's...(read more)

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1/16/2018 8:36:31 AM

Posted To: Pipeline Press

Replacing real estate agents with “something else that doesn’t earn a 6% commission” is certainly a discussion topic. Here’s one new venture: peer to peer real estate marketplace . But as Brian B. from New Jersey points out, “If a new company says it’s taking out the middleman and it will handle all the paperwork, isn’t it now the new middleman?” All I know is what I read in the newspapers, and The National Association of Realtors reports 88% of all buyers financed their homes the past year, but 98% of younger buyers financed, showing finding financing is especially key for young homebuyers. I guess they have less moola. At the other end of the mortgage process, servicers of loans along the Gulf Coast are now seeing increasing delinquencies from...(read more)

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1/16/2018 8:16:37 AM

Posted To: Mortgage Rate Watch

Mortgage rates caught a break yesterday by moving lower for the first time this week. They arguably caught a break again today by not moving any higher than they did. Underlying bond markets (which drive mortgage rate changes) were rocked this morning by stronger inflation data. The important Consumer Price Index (CPI) was expected to hold steady at the same low levels that have persisted since the middle of 2017. The modest uptick in inflation sent bond yields higher and resulted in most mortgage lenders putting out noticeably higher rates this morning. Lenders don't like to put out more than one rate sheet per day if they can help it, but if markets move enough, they will "reprice." After the initial trauma, bond markets began a trend of improvement that ultimately resulted in widespread...(read more)

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1/12/2018 7:00:00 PM

Posted To: MBS Commentary

I laughed out loud today--something I rarely do when reading typed words--after MBS Live cornerstone Sung Kim quipped "thank God China is buying today!" This joke works on so many levels. Much of the week was devoted to chasing a red herring of a story that claimed China was mulling a reduction in its US Treasury portfolio. Rational people or those who believed the things I was yelling knew the story was mostly bogus, but it went fairly viral nonetheless because it offered an explanation for market movement that was otherwise not easily explained. Cue this afternoon's bond market rally. Bonds had just finished a fairly quick sell-off in response to this morning's stronger CPI data. Apart from technical levels and potential "value buying" among traders who think they've...(read more)

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1/12/2018 6:58:02 PM

Posted To: Pipeline Press

Plenty of people tell me that I’m “long in the tooth.” (A way of gauging a horse’s age.) Tooth? Thanks to Emily W. for sending in something that all of us have probably wondered about, even though you weren’t aware that you were wondering about it: an article on the origin of "Bluetooth," "eBay," "Google," and other terms and names. Nomenclature, and technology, are always changing. The car business certainly changes, and it appears that with the recent Toyota/Mazda plant announcement, foreign auto manufacturers are on a path to soon surpass the Detroit giants as the largest auto producers in the US by volume! Foreign automakers and their US competitors are expected to produce the same number of vehicles in the US for the first time ever in 1Q18. Broker News -...(read more)

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1/12/2018 8:14:31 AM

Posted To: MBS Commentary

A majority of market participants (or their mentors) were steeped in the extraordinary inflation/rate volatility of the late 70's and early 80's. As the recovery from the financial crisis began, and as the Fed was pumping trillions of dollars back into the system, these market participants thus had an unhealthy fear of every little uptick in inflation at first. As reality unfolded, we've seen that worrying about inflation was a waste of energy at best, and a fool's errand at worst. I know I had a great time making fun of them from 2011-2015 at least. Things began to change in late 2015. Inflation began a quick and unequivocal return to relevance as core CPI shot up from a steady, depressed state at 1.6-1.7 to 2.3% by Febraury 2016. Had it not been for Brexit, we likely would...(read more)

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1/12/2018 7:34:30 AM

Posted To: MBS Commentary

Yesterday morning's news regarding China potentially buying fewer (or selling) US Treasuries has been a big talking point. While most pundits and even a few traders jumped on the bandwagon right off the bat, we immediately flagged it as a Red Herring . By the end of business yesterday, there were a few good news stories that also began to push back on the suspicious assertion. But the best push back came from China itself, with the State Administration of Foreign Exchange going on the record saying that the news either quoted the wrong sources or was altogether fake . Enough of the market was conned into selling bonds based on yesterday's fake news that today's real news provided a bit of a rally opportunity overnight. The bigger move hit bonds in a negative way just after the European...(read more)

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1/11/2018 3:50:02 PM

Posted To: Mortgage Rate Watch

Mortgage rates caught a break today, moving lower for the first time this week and pushing back from the highest levels since early July 2017. Like yesterday, strong demand at a Treasury auction helped US bond markets, but notably, only the longer-term maturities (10yr and 30yr bonds were the big winners). Fortunately, the bonds that underlie mortgage rates tend to correlate well with longer-term Treasuries. Economic data also played a role with a weaker reading on inflation at the producer level. Tomorrow brings the much more important reading on consumer-level inflation (via the Consumer Price Index or CPI). If CPI is similarly weak, it could steel the resolve on the part of rates to hold to recent ceilings--potentially providing a base of operations for borrowers to consider a strategy other...(read more)

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1/11/2018 2:51:00 PM

Posted To: MND NewsWire

A Ginnie Mae official told Congress this week that his agency has growing concerns over the incidence of "loan churning" in the VA mortgage program. Michel R. Bright, Ginnie Mae's Executive Vice President and COO was among four mortgage industry experts testifying about the issue to the House Committee on Veterans Affairs on Wednesday. Bright said since the loan churn problem became evident, Ginnie Mae has realized it could ultimately harm borrowers in the form of higher interest rates and has the potential to cause problems with investors that could spill over into FHA and USDA loan programs as well. Starting in early 2016, the agency and its investors noted loan prepayment rates were increasing and serial refinancings were occurring with greater frequency in the VA mortgages Ginnie Mae guarantees...(read more)

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1/11/2018 2:27:42 PM

Posted To: MND NewsWire

Despite the usual holiday lull in overall mortgage applications, the demand for newly constructed homes increased in December. The Mortgage Bankers Association (MBA) said its Builder Applications Survey (BAS) found those applications were up 18 percent from November. The change does not include any adjustment for typical seasonal patterns. The applications were 7.8 percent higher than in December 2016. Based on data from the BAS, conducted among mortgage subsidiaries of new home builders, augmented by assumptions about market coverage and other factors, MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 554,000 units in December. This is a decline of 16.4 percent from the November pace of 663,000 units. On an unadjusted basis, there were an estimated...(read more)

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1/11/2018 9:17:43 AM

Posted To: MBS Commentary

Yesterday, the possibility of China decreasing its purchases of US Treasuries was all anyone could talk about . Amid a sea of voices declaring this as a major fundamental market mover for US rates, I yelled counterpoints from my soap box. Today: vindication . The push back had already begun as of yesterday afternoon, but the best snippet came in this story from Reuters, which said “the news could quote the wrong source of information, or may be fake news." Naturally, bonds rallied immensely on these revelations, right? After all, if the original news was the source of yesterday's overnight weakness, such a retraction in headlines would be worth a retraction of market movement. But that's not exactly what happened. Although there was a token reaction to the headlines (which...(read more)

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1/11/2018 8:18:44 AM

Posted To: Pipeline Press

When I grow up I want a million-dollar house! Tight inventories, costs, and appreciation have created an increase of houses worth seven figures - the number has quadrupled in fifteen years. (Builder reasons? Higher profits & profit margins and building & labor costs, to name a few.) There probably aren't too many of those that are impacted by the CRA program (Community Reinvestment Act) - bankers should know that regulators are working on "revamping" the program . Capital Markets - What is Moving Rates Higher? For anyone anxious about Libor's replacement, the Fed announced three new reference rates banks can use instead of Libor, as that index is scheduled to be phased out in 2021. The new indices are based on overnight repurchase agreement (repo) transactions that are secured by Treasuries...(read more)

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1/11/2018 8:13:15 AM

Posted To: MBS Commentary

Yesterday: Japan . Today: China . Stakeholders, journalists, and even a fairly wide swath of bond traders are eager to make sense of the past 2 days of weakness, even when that weakness isn't easily ascribed to a single headline or development. The first big trading idea in 2018 is to SELL longer-term bonds faster than shorter-term bonds (aka a "curve steepening" trade). We knew this was a risk. We also knew the resulting movement wouldn't come with a satisfying way to explain it. After all, who wants to say "supply-related anxieties in govies and corporates combined with a glut of new year liquidity and repositioning in bond markets (even if it's only marked profit-taking on 2017's "flattener" trade) to force a break above key technical levels, fueled...(read more)

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1/10/2018 4:37:09 PM

Posted To: Mortgage Rate Watch

Mortgage rates were much higher this morning, bringing them to new 6-month highs (a dubious distinction also accomplished yesterday). Unlike yesterday, there were good and bad moments today. Bond markets (which underlie rate movement) were already starting to show signs of support this morning. Early this afternoon, a scheduled auction of 10yr Treasury Notes was met with strong demand. When demand for a bond rises relative to supply, rates fall. Mortgage rates aren't based directly on 10yr Treasuries, but there is a strong correlation between the two. The 10yr serves as an important benchmark for any longer-term interest rate in the US, so the strong auction suggested rates may attempt to find a ceiling here after a rocky start to the year. The staying power of any such ceiling remains to be...(read more)

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1/10/2018 2:35:00 PM

Posted To: MND NewsWire

They may be a little late to the game, but John McManus, publisher of BuilderOnLine.com , is betting home builders are about to get a dose of digital reality . McManus, reporting from the Consumer Electronics Show (CES) currently underway in Las Vegas says the digital age has already transformed the purchase of goods and services; the National Retail Federation says 174 million Americans shopped both on-line and in stores between Thanksgiving Day and Cyber Monday, and 51 million shopped only in stores. But 58 million confined their shopping to their mobile phone, PC, or laptop . Last Friday's jobs report would have met the most cautious of analysts' estimates for 161,000 new jobs were it not for a loss of 20,000 in the retail sector. Those figures are, in essence, a payoff for the billions...(read more)

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1/10/2018 11:26:37 AM

Posted To: MND NewsWire

Mortgage application activity roared out of the gate in the first week of the New Year, as the country got back down to business. Much of the week's gain could probably be attributed to consumers catching up after the usual holiday induced December slowdown. Applications for both refinancing and home purchasing were up substantially during the week ended January 5. It was, in fact, the strongest week for refinancing applications since mid-July. The Mortgage Bankers Association said its Market Composite Index, a measure of loan applications volume, increased 8.3 percent on a seasonally adjusted basis and rose 46 percent compared with the week ended December 29 on an unadjusted basis. The week's report included an adjustment to account for the New Years Holiday. MBA said there was also a revision...(read more)

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1/10/2018 8:21:10 AM

Posted To: Pipeline Press

Sharing a king bed with your 80-year old aunt, or the refrigerator with your twin 25-year olds who can’t afford to move out, probably isn’t high on your list. But looking at builder's building trends shows that they are certainly cognizant of, and reacting to, multi-generational housing needs. Upcoming Events, Training, and Webinars Reverse Mortgage Funding LLC is offering a free, in-person "Reverse Mortgage Jump Start" accelerated learning course - one in Miami on Wednesday, January 31 , and another in Orlando on Thursday, February 1 . Each one-day session will be from 10:00 a.m. to 2:00 p.m., with lunch included. Find out how you can easily add this missing piece to your product mix, with a team of industry-leading professionals on your side. If you're originating mortgage refinancing...(read more)

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1/10/2018 8:13:12 AM

Posted To: MBS Commentary

The proverbial "you know what" just got real. We'd been waiting for the first big dose of bond market momentum following months of consolidation heading into the end of 2017. We figured it would show up around the 2nd week of January. It's showing up. It's the less pleasant of the two possible outcomes. The end. Seriously, that's it for today's Day Ahead. There's no sense in overcomplicating the issue. It's not event-driven. It's not overnight news out of China. That was a symptom of our disease-- not the germ that caused it. We've been discussing the risk of said disease incessantly. On the off chance this is your first day reading my notes, you'd be better served by skimming recent examples than by me rehashing it all over again. Here's...(read more)

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1/10/2018 8:02:27 AM

Posted To: MBS Commentary

In certain circles, much was made of overnight news that the Bank of Japan would be buying fewer bonds. That's about as far as most news stories delved into the topic, despite it being more complicated than bond-buying news in the US. Let's break it down: In the US, the Fed lays out a guaranteed amount of bond buying that will occur each month. The Fed has also set in motion a guaranteed schedule of balance sheet reduction. Specifically, they will reinvest bond trading proceeds only up to the extent those proceeds exceed gradually rising caps (currently rising at $6bln/month for Treasuries and $4bln/month for MBS). The Bank of Japan (BOJ) lays out a more detailed menu of bond buying options but with more flexibility on the amount. For instance, it's most recent schedule ( feel free...(read more)

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1/9/2018 4:43:06 PM

Posted To: Mortgage Rate Watch

Mortgage rates rose again today, adding to a nasty 2-day streak that's taken the average 30 yr fixed rate an eighth of a point higher. That's an uncommonly big 2-day move, and it brings rates to their highest levels since early July 2017. Of potentially more concern is the fact that the current rate spike is making an ominous suggestion about the broader trend. Specifically, the last 3 months of 2017 saw rates consolidate in a mostly-sideways pattern. We'd been waiting for a bigger break higher or lower. Although there were some early warning signs that the breakout would be to the upside, this week has all but confirmed it. The implication is for things to get worse before they get better. Loan Originator Perspectives Bond markets' recent sell-off accelerated today, as oil prices and stocks...(read more)

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1/9/2018 2:51:00 PM