Posted To: MND NewsWire

Fannie Mae asked lenders, as part of its third quarter Mortgage Lender Sentiment Survey about their digital transformation efforts. The company says that, in previous surveys, lenders have consistently shown a strong interest in leveraging technology to improve both the front-end consumer experience and back-end operational efficiency . Lenders were asked four questions: 1. Between improving the front-end consumer borrower experience and the back-end operational efficiency to reduce origination costs, which area drives more lenders' digital transformation efforts? 2. How successful do lenders view their front-end digital transformation efforts versus their back-end efforts? Which area has a higher success rate? How successful do lenders view the scope and the impact of their digital transformation...(read more)

10/23/2019 9:19:38 AM

Posted To: MND NewsWire

Home price increases slowed appreciably in August. The Federal Housing Finance Agency (FHFA) said its House Price Index (HPI) was up 4.6 percent on an annual basis in August compared to a 5.0 percent annual gain in July and the month-over-month gain was halved compared to the prior month, coming in at 0.2 percent. The New England region posted the highest monthly increase at 0.9 percent, but changes were negative in three census divisions. There was an 0.8 percent decline in the East South Central division (Kentucky Tennessee, Mississippi, and Alabama) and prices were down 0.1 percent in both the South Atlantic (coastal states from Delaware to Florida) and the Mountain division. The eight states in the Mountain division (Arizona and New Mexico north to Idaho and Montana) however, had the largest...(read more)

10/23/2019 9:08:11 AM

Posted To: MBS Commentary

Yesterday saw bonds respond almost exclusively to Brexit-related headlines (read THIS RECAP for a synopsis of the day's events and Brexit's impact on the bond market in general). If you're not into clicking links, here's the most relevant excerpt: By refusing to render final approval by Thursday, Parliament is probably unable to get something on the EU's desk in enough time to avoid going past the October 31st deadline the EU had set for Brexit. As such, an extension is likely and we're just waiting to find out how long it will be and if there are any interesting terms. The bottom line is that a DEAL Brexit (as opposed to a "no deal Brexit") remains a definite possibility. That's the greater of two evils for the bond market and a big reason that rates are...(read more)

10/23/2019 7:38:52 AM

Posted To: Pipeline Press

Last week the Mortgage Bankers Association’s survey showed that retail applications dropped almost 12% last week from the week before. Refis were down 17 percent – in one week! Lots of folks are being asked by management about projections for 2020. Have fun estimating volume, margins, and “person-power” needs. And how much of your competitor’s market share can you grab? Will credit unions and brokers continue to grow? The MBA’s Joel Kan observed, “Our 2018 volume estimate was $1.6T, with $1.2T of that purchase. We currently have $1.9T for 2019 and $1.7T for 2020 . For 2019 we have just under $1.3T purchase and $670B refi.” Rates will drive refinancing, as well as corresponding “refi burnout” which involves borrowers who either aren’t...(read more)

10/23/2019 7:08:18 AM

Posted To: MND NewsWire

Mortgage rates increased last week. Mortgage application activity, however, did not. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of that volume, declined 11.9 percent on a seasonally adjusted basis during the week ended October 18 and was 12 percent lower than the previous week on an unadjusted basis. The higher rate of applications during much of the last year has been largely fueled by refinancing which has driven the frequent reversals as well. Purchase applications have moved up and down, but movements have been much shallower, seldom exceeding 5 percent in either direction. That was true last week as well. The Refinancing Index was down 17 percent compared to the previous week although it remained 126 percent higher than during the same week in 2018...(read more)

10/23/2019 6:18:09 AM

Posted To: MBS Commentary

First things first: all of the volatility we're about to discuss has been occurring inside a fairly narrow range in the slightly bigger picture. Moreover, much of that narrow range exists inside an even bigger version of a 'narrowing' range (i.e. the "consolidation pattern" that's existed for several months. With all that out of the way... BREXIT! Yes, it's a market mover even though we're talking about politics on the other side of the world. And no, it doesn't really make much sense, but I will give a brief 10 cent tour. Some politicians in The UK thought life would be better if the country left the EU. Voters agreed, albeit by a razor thin margin, and probably without ever being able to understand the economic ramifications of their vote. Nonetheless...(read more)

10/22/2019 3:42:54 PM

Posted To: Mortgage Rate Watch

Mortgage rates recovered just a bit today after hitting the highest levels in more than a month yesterday. The inspiration for much of the recent upward pressure on rates can be traced to progress in Britain's attempt to exit the European Union (aka "Brexit"). It's not that Brexit is bad for interest rates. In fact, it's definitely been a positive influence off and on for nearly 4 years now. Rather, it's the manner in which Brexit is accomplished that matters to global bond markets, and thus, to interest rates. To be clear, European markets have seen the biggest effects, but there is some spillover in the US. The most important consideration at present is whether or not the UK will leave the EU with or without a deal. A so-called "no deal" Brexit would be the better option for fans of low interest...(read more)

10/22/2019 2:38:00 PM

Posted To: MND NewsWire

The Supreme Court has agreed to hear a case challenging the constitutionality of the Consumer Financial Protection Bureau (CFPB). The case "Seila Law v CFPB could spell the end of the regulatory agency established by the Dodd Frank Wall Street Reform and Consumer Protection Act in 2008 given that the newest member of the Court, Justice Brett Kavanaugh, has already ruled against the agency in a lower court. CFPB began an investigation of Seila Law, a California firm that describes itself as offering a variety of legal services including consumer debt resolution, to determine if it had violated federal telemarketing laws. Seila refused to comply with requests for information and documents, instead suing the agency. It argued that the single director structure of the agency was unconstitutional...(read more)

10/22/2019 2:37:03 PM

Posted To: MND NewsWire

Sales of existing homes, which had posted advances in both July and August, fell back in September. The National Association of Realtors® (NAR) said sales of single-family houses, townhouses, condominiums, and cooperative apartments were completed at a seasonally adjusted annual rate of 5.38 million in September compared to a rate of 5.490 million in August, a decline of 2.2 percent . Existing home sales had grown by 2.5 percent in July and 1.3 percent in August. September sales were 3.9 percent higher than the 5.18-million-unit pace in September of 2018. Sales of single-family homes dropped from an annual rate of 4.91 million in August to 4.78 million in September, but they are also 3.9 percent higher than the previous September. Condo sales rose 1.7 percent to an annual rate of 600,000...(read more)

10/22/2019 9:00:19 AM

Posted To: MBS Commentary

Yesterday saw an extension of the recent selling trend in bonds with yields hitting the highest levels in more than a month. One might argue that yesterday was actually a breakout from the consolidation trend we've been tracking, but there are two caveats to that approach. First off, we normally like to see a bigger, more sustained break with higher volume if we're going to confirm a shift in trend. Yesterday's volume was actually fairly low. And secondly, the lines involved in charting a consolidation pattern are bit more mystical and subjective compared to the simple act of tracking trends and momentum. In other words, I could make a compelling case for adjusting almost any trend line I place on the charts, even if only slightly, but there's no subjectivity involved in saying...(read more)

10/22/2019 7:32:35 AM

Posted To: Pipeline Press

I am often asked about a primer for capital markets. Much of the training is “on the job,” but for anyone serious about learning the topic, here’s a good place to start . How about a little learnin’ about the stock market, despite its waning popularity? (About 3,600 firms were listed on U.S. stock exchanges at the end of 2017, down more than half from 1997.) How did the bull become associated with rising stock prices? Some say it’s because the bull attacks by swinging its horns upward. But the association of bears with falling prices came first, thanks to a practice in 17th-century fur trading. Middlemen sometimes sold bearskins they had not yet bought from hunters, betting that the price would drop. It seems to be an early form of what is now known as naked short...(read more)

10/22/2019 6:27:56 AM

Posted To: Mortgage Rate Watch

Mortgage rates may have managed to remain mostly flat last week, but they did so near their highest levels in several weeks. After moving up at a moderate pace today, they're now at the highest levels in just over a month. After being as low as 3.375-3.5% for a top tier conventional 30yr fixed quote in early September, the average lender is now roughly 0.5% higher in rate. That equates to a $84 change in monthly payment on a $300k loan (or $28/mo for every 100k financed). Today's rate spike came courtesy of news relating to Brexit over the weekend. Investors were on guard against the possibility that the negotiation process would NOT be extended. If that had been the case, rates might have moved lower today instead. But now that an extension looks like a strong possibility, rates were free...(read more)

10/21/2019 5:28:00 PM

Posted To: MND NewsWire

In an early article, we summarized the first part of a new report on America's aging population, especially as related to homeownership, published by the Harvard Joint Center on Housing Studies. The second part of the report deals with the elderly's housing and financial condition. Since the turn of the century, incomes have grown much faster among retirement-aged households than those of pre-retirement age. However, since the Great Recession most of the gains have gone to the highest-income households in each age group. The median income for the top 10 percent of earners in the 50 to 64-year group has risen nearly twice as fast (15 percent) as among the bottom 10 percent, a record median of $204,000 in the first case, $14,400 in the second. Meanwhile, the median for the highest earners in...(read more)

10/21/2019 9:53:56 AM

Posted To: MBS Commentary

Last week saw the US bond market fight off an intermittent barrage of weakness as global markets geared up for the weekend's big Brexit vote. By Friday, 10yr yields were only 2bps higher on the week. This left them just inside the longer-term consolidation pattern we've been following (in the chart below), but at risk of breaking out depending on the reaction to the weekend's events. We expected 2 of the 3 possible outcomes (Brexit deal approved or delayed) to be bad for bonds while only the longshot outcome (no-deal Brexit with no request for extension) would have been good. As expected, British lawmakers opted for the middle path by foregoing a vote on the current Brexit deal and instead forcing Prime Minister Johnson to request an extension from the EU. The bond market response...(read more)

10/21/2019 7:09:50 AM

Posted To: Pipeline Press

Great MLOs keep up on events not only impacting their loans but on events impacting the everyone else’s loans as well. For example, the Supreme Court has agreed to rule on the constitutionality of the CFPB’s structure . Saturday’s commentary discussed new developments for the transition away from LIBOR and toward SOFR. For any clients with adjustable rate mortgages the Treasury Department and the IRS issued proposed regulations to help taxpayers avoid negative tax consequences in the transition away from the London Interbank Offered Rate and other interbank rates. And many companies breathed a sigh of relief last week when FASB held a board meeting to discuss the comment letters surrounding the proposed extension to the adoption date of CECL. The board unanimously voted to...(read more)

10/21/2019 6:19:12 AM

Posted To: MBS Commentary

Today was a throw-away day for the bond market. Yields matched their narrowest trading range of the week and ended the day at their most 'unchanged' levels of the week (i.e. closest to the previous day's close). In addition, Friday's close was only 2bps away from last Friday's close. Translation: bonds did a GREAT job of QUICKLY getting into position for upcoming risks after LAST WEEK'S Brexit news. You'd be forgiven if you forgot about this one already, but I'm referring to the meeting that took place between Boris Johnson and the Northern Irish PM Varadkar. That meeting introduced the prospect of a last minute Brexit deal. Bonds jumped accordingly (perhaps with some help from the trade deal announcement the following day) and the waiting game began. As of tomorrow...(read more)

10/18/2019 4:04:35 PM

Posted To: Mortgage Rate Watch

Mortgage rates were flat today. In fact, they were very close to being flat on the week for that matter! This is a reflection of the bond markets current set of concerns, which really came into focus late last week with Thursday's Brexit-related news and Friday's trade deal updates. Brexit refers to the UK's attempts to exit the EU. As esoteric of a concern as that may seem, it's something that the bond market (and hence, interest rates) quite clearly cares about. Last Thursday's unexpected progress between Boris Johnson and Northern Ireland's Prime Minister sent rates screaming higher at their fastest pace in months. I could also argue that much of the damage that seemed to have been done by Friday's US/China trade news was instead follow-through momentum from Thursday's Brexit-inspired move...(read more)

10/18/2019 4:03:00 PM

Posted To: MND NewsWire

More than a quarter of new home purchases in 2018 were financed through non-conventional sources. Data from the Census Bureau's Survey of Construction shows that, while the new home market was dominated by loans from Fannie and Freddie Mac, other funding accounted for 28.6 percent of new home purchases. Danushka Nanayakkara-Skillington analyzed the data for an entry in the National Association of Home Builders' Eye on Housing Blog. FHA-backed loans were the most prevalent form of non-conventional financing in the new home market last year with an 11.0 percent share, followed by all-cash at 10.0 percent. VA-backed loans accounted for 5.6 percent and other financing for 2.1 percent. That latter category included loans from the USDA's Rural Housing Service, Habitat for Humanity, loans from individuals...(read more)

10/18/2019 11:46:10 AM

Posted To: MND NewsWire

Even though the pace of home building remains below where the industry would like it to be, Fannie Mae says it helped drive residential fixed investment into the black in the third quarter. The company's Economic and Strategic Research Macroeconomic Forecast Team says it would be the first time that component will make a positive contribution to the gross domestic product (GDP) since 2017. The team had previously forecast a positive contribution from residential fixed investment, but data has come in stronger than anticipated and they have revised it upward to 4.2 percent annualized in the third quarter. This strength should carry into the fourth quarter, putting the remainder of the year on a solid footing. "What had been a drag on the economy for almost two years will now likely be a near...(read more)

10/18/2019 9:11:31 AM

Posted To: MBS Commentary

Yesterday brought the highest yields in a month as Brexit-related optimism swelled early in the overnight session. At issue: British PM Johnson and EU negotiators reached "a deal." Great! Right? Brexit is solved? But wait... British parliament would still need to sign off on the deal, and the news was quick to point out the relative impossibility of such a thing. As such, overnight market movement began to reverse course even before US markets opened. That brings us to today. Traders know that an easy passage of the current deal is unlikely. But they also know that the deal could be adjusted or debated in such a way that passage is not impossible. Adding to the uncertainty is the fact that the EU could respond in one of two ways if there's no deal by the end of the month (grant...(read more)

10/18/2019 7:03:07 AM