Posted To: Mortgage Rate Watch

2021 hasn't been a great year for mortgage rates--at least not as far as their trajectory is concerned. But that could be changing . Even if things don't get any better from here, the past 3 weeks are collectively the best we've seen since January. Mortgage rates are primarily driven by day-to-day movement in the bond market. There is a particularly strong correlation between 10yr Treasury yields and mortgage rates. While this definitely wasn't the case for much of 2020, the correlation is now generally back intact. As such, the ability of 10yr Treasury yields to remain under a ceiling of 1.75% has coincided with resilience in the mortgage market. If we zoom in on the blue line, we can see 10yr yields departing their prevailing trend for 2021 and starting to move sideways in recent weeks. It...(read more)

4/9/2021 6:26:00 PM

Posted To: MBS Commentary

Respectable Recovery After Morning Drama "Drama" may be a bit of an overstatement, but bonds were weak enough this morning to cause some concern about the week's prevailing message (i.e. that the 2021 uptrend in rates is strongly considering taking the month off in April). As the day progressed, yields inched back toward lower levels. While Treasuries ultimately failed to make it back to positive territory, MBS succeeded. The outperformance can be attributed to light MBS supply over the past 2 days as well as Treasury-specific headwinds (such as next week's condensed auction cycle). Econ Data / Events Fed MBS Buying 10am, 1130am, 1pm Core Producer Prices (y/y) 3.1 vs 2.7 f'cast, 2.5 prev Market Movement Recap 08:44 AM Much weaker overnight in an apparent confirmation of...(read more)

4/9/2021 3:40:36 PM

Posted To: MBS Commentary

Yesterday's closing commentary, entitled "Stronger Case For Stability But Not Complacency" acknowledged the reassuringly sideways vibe offered by the first 4 days of this week's trading but warned "without some fundamental shock to the economy or covid outlook, we won't be surprised if this rally has a tough time making huge progress toward lower rates." That's pretty vague, but the overnight trading action has offered clarity . Rather than the general notion of a "tough time making huge progress," we can now observe a blatant unwillingness on the part of 10yr yields to break below 1.62%. This strongly reinforces the other comments from yesterday's recap, which said the recent strength is best thought of as a sideways consolidation, and that...(read more)

4/9/2021 9:50:24 AM

Posted To: MND NewsWire

American home owners received bills for $323 billion in property taxes last year, a 5.4 percent increase from $306.4 billion in 2019. ATTOM Data Solutions says that the average bill for each of the 87 million single-family homes in the country was $3,719, an effective tax rate of 1.1 percent. This average was up 4.4 percent from $3,561 in 2019 while the effective property tax rate of 1.1 percent in 2020 was down slightly from 1.14 percent in 2019. "Homeowners across the United States in 2020 got hit with the largest average property tax hike in the last four years, a sign that the cost of running local governments and public school systems rose well past the rate of inflation. The increase was twice what it was in 2019," said Todd Teta, chief product officer for ATTOM Data Solutions. "Fortunately...(read more)

4/9/2021 9:47:27 AM

Posted To: MND NewsWire

Black Knight reports that the number of loans in forbearance programs declined last week for the sixth straight time and it was the largest drop in six months . As of April 6, the number of loans in active plans was 2.312 million or 4.4 percent of all homeowners with mortgages. This is down by 228,000 from the previous Tuesday, a 9 percent drop in a single week. A company spokesperson said the decrease was not unexpected. It was driven largely by those who entered the program shortly after it was authorized exiting their plans at the 12-month mark. That would have been their final expiration point prior to recent extensions. The improvement was widespread. All investor classes saw significant improvement in their numbers. The largest change was among those loans serviced for FHA and VA, down...(read more)

4/9/2021 9:45:59 AM

Posted To: Pipeline Press

What’s new out there? Queen Elizabeth’s husband Prince Phillip has passed away this morning at age 99. Wealthy people in New York seem to be fleeing to live in other states with a lower tax rate. Both Freddie Mac and Fannie Mae released QM loan information that maps out their policies. Any lender originating Agency loans should be aware of their requirements and their effective dates related to their purchase of loans subject to the Qualified Mortgage (QM) Rule and originated relying on the GSE Patch. And tongues are wagging about the proposed CFPB RESPA Servicing Rule with protections for borrowers affected by the COVID emergency . Industry players are questioning the regulatory authority to issue a blanket prohibition on foreclosure through the end of the year and are concerned...(read more)

4/9/2021 9:41:44 AM

Posted To: Mortgage Rate Watch

Mortgage Rates had another decent day on Thursday with the average lender offering modestly better terms compared to yesterday. Improvements continue to arrive in fairly small doses, but they've been adding up . You'd have to go back nearly a month to March 12th to see anything definitively lower (although it's worth noting that today's rates are also roughly in line with those seen on March 25th). As far as specific levels, lenders remain widely stratified with purchases being quoted in a range of 3.00-3.125% and refinances in a range of 3.125-3.375 (conventional, 30yr fixed). Today's specific events and economic data releases did little to motivate the gains seen in rates, although a report showing higher-than-expected Initial Jobless Claims technically agrees with the move. There were also...(read more)

4/8/2021 3:02:00 PM

Posted To: MBS Commentary

Stronger Case For Stability, But Not Complacency With today's solid gains, this week becomes the best argument we've seen for a shift in 2021's rising rate trend. Without some fundamental shock to the economy or covid outlook, we won't be surprised if this rally has a tough time making huge progress toward lower rates. For now, it's best thought of as a sideways consolidation, but that's still a big victory compared to most of the rest of the year. All that having been said, the case for higher rates remains compelling in the bigger picture, so it's important to stay on guard for an eventual relapse of the previous trend. Econ Data / Events Fed MBS Buying 10am, 1130am, 1pm Jobless Claims 744k vs 680k f'cast, 728k prev Market Movement Recap 08:15 AM Modestly stronger...(read more)

4/8/2021 3:00:01 PM

Posted To: MND NewsWire

Non-government lenders continue to return to mortgage lending after fleeing at the start of the pandemic. The Mortgage Bankers Association (MBA) says this has helped increase the supply of jumbo mortgages for six straight months and helped drive MBA's Mortgage Credit Availability Index (MCAI) up slightly in March. The Index rose 0.6 percent to 125.4 last month. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The Conventional MCAI increased 0.8 percent, while the Government MCAI increased by 0.4 percent. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 1.5 percent, and the Conforming MCAI rose by 0.2 percent. "Credit availability inched higher in March, driven by the ongoing...(read more)

4/8/2021 10:15:21 AM

Posted To: Pipeline Press

"i" before ‘e’ except after ‘c’” has finally been disproved by science. Does “machine learning” equal “Artificial Intelligence (AI)”? Nope . And did you know that over the past 12 months, in the U.S. there has been a net loss of 2,563 bank branches (3,585 branches shuttered while 1,022 were opened) per S&P Global? Although the pandemic has definitely had a hand in speeding some of these closures along, lenders are concerned about how the post-pandemic world will affect depository bank and mortgage bank branch levels. Lenders are also concerned about how HMDA data, sifted through by the CFPB, may be construed. It is generally thought that the lowest cost, most efficient producers will rise to the top, and the commentary has some notes...(read more)

4/8/2021 8:55:00 AM

Posted To: MBS Commentary

2 weeks ago, we talked about 2021's Thursday curse . It was finally broken last week . Today's early gains mean we may be looking at a second consecutive winning Thursday for bonds, but we'll reserve judgment until the close. Even if yields end up lower, the significance of any rally is limited without a break below 1.62% (10yr). After that, 1.58+ is an equally important floor. Remaining above those levels isn't necessarily bad. It just means that the departure from 2021's rising rate trend is taking a more consolidative (sideways) approach (which is the higher probability outcome in the first place). What has happened in the past when rates have embarked on similar consolidations? Here are the most relevant examples: But in fairness to the current move, it's already...(read more)

4/8/2021 8:46:18 AM

Posted To: Mortgage Rate Watch

Mortgage Rates have been doing pretty well so far in April. They bounced at long-term highs on March 31st (matching the highs from 2 weeks prior), but have been descending gently since then. Today's move was definitely modest. The average borrower wouldn't see much of a difference--if any--versus yesterday's rate offerings. But given the rising rate reality of 2021, it's a victory to merely avoid hitting new highs. It's tough to say how long this interlude of stability will last. It could be over soon , or it could be weeks before we get back to recent highs. When it comes to how far rates might fall, it's easier to say that we'd need to see substantial motivation. That motivation could take the form of anything "bad" for the economy or the covid outlook (weaker economic data, lower inflation...(read more)

4/7/2021 3:33:00 PM

Posted To: MBS Commentary

No Reaction to Fed Minutes (Or Anything Else For That Matter) It's been a light week in terms of scheduled data and events with the power to motivate bond market volatility. Today wasn't much of an exception although one must always give a wider berth to any official communication from the Fed. In today's case, the Minutes from the most recent meeting (3 weeks ago) were 100% as-expected. Bonds logically ignored the Fed and continued trading in the new, sideways range--a hopeful, short term development that we'd like to see turn into a longer-term development. 1.62/63% continue offering resistance to bigger rallies in terms of 10yr yields. Econ Data / Events Fed MBS Buying 10am, 1130am, 1pm Market Movement Recap 08:30 AM Fairly quiet overnight: flat in Asia, stronger in Europe...(read more)

4/7/2021 3:30:42 PM

Posted To: MND NewsWire

Consumer attitudes perked up in March, sending the Fannie Mae Home Purchase Sentiment Index (HPSI) up 5.2 points compared to February. The company said four of the HPSI's components rose during the month, taking the index to 81.7. The percentage of respondents who say it is a good time to buy a home rose to 53 percent from 48 percent and there was a 3 point decline in those who viewed the timing as bad. This left a net of 13 points, an increase of 8 points for the month but 7 points below the level a year earlier. Attitudes about selling a home increased even more . Sixty-one percent said it was a good time, up from 55 percent in February while the percentage who say it's a bad time dropped from 35 percent to 28 percent. As a result, the net share of those saying it is a good time to sell increased...(read more)

4/7/2021 1:22:28 PM

Posted To: MND NewsWire

After years of gains in educational attainment, employment, and wages, women have increased their rates of both homeownership and headship (the number who are heads of households). Now the Urban Institute (UI) says the pandemic may have put those advances at risk. Jung Hyun Choi, Laurie Goodman, and Jun Zhu write in UI's Urban Wire blog that 30 years ago a male partner in married, heterosexual households was generally the main breadwinner and considered the household head. Then, between 1990 and 2019, as the marriage rate declined, the share of households headed by single women increased from 17.6 percent to 22.6 percent. It is also common to see women heading married two-earner households and those where this is true increased 24.3 percentage points over that same period to 46.1 percent in...(read more)

4/7/2021 11:08:27 AM

Posted To: MBS Commentary

The longer-term rising rate trend kicked into higher gear in February. After several false starts, bonds are in the midst of their best attempt yet at a ceiling bounce. What will such a bounce look like? How will we measure its progress? To start, the primary concern is simply avoiding a break above 10yr yields of 1.75% (aka a "sideways victory"). This helps build a case for rates leveling-off and embarking on a more horizontal trend. The first benchmark of a successful consolidation attempt would be a break below 1.62 and/or 1.60 depending on your preferred nearby floor (cases to be made for both). If yields can't break those floors, the implication is for a shorter-lived consolidation that gives way to another ceiling break and new ceilings to be explored in the 1.84-1.95 range...(read more)

4/7/2021 9:32:54 AM

Posted To: Pipeline Press

Does the CFPB have jurisdiction of all mortgage-related agencies, borrowers, and servicers? We’ll see, as yesterday, and this proposal should not come as a surprise to any mortgage servicer, the Consumer Financial Protection Bureau issued a proposal that would broadly halt foreclosure initiations on principal residences from August 31, 2021 until 2022, and change servicing rules to promote consumer awareness and processing of Covid-relief loss mitigation options. This article spells out some of the reasons. I will not opine, but you should ask the head of your servicing department what they think. The devil is in the details. The proposal comes as the housing market is strengthening, loans in Covid-related forbearance are dropping, the unemployment rate is ticking down, and the nation’s...(read more)

4/7/2021 9:01:06 AM

Posted To: MND NewsWire

Mortgage application volume declined for the fifth straight week during the period ending April 2, and by the largest amount over that period. The Mortgage Bankers Association said its Market Composite Index fell by 5.1 percent on a seasonally adjusted basis from the previous week and by 5.0 percent before adjustment. The Refinance Index was down 5 percent compared to the previous week and was 20 percent lower than the same week one year ago . The refinance share of mortgage activity was 60.3 percent compared to 60.6 percent the previous week. The seasonally adjusted Purchase Index decreased 5 percent as well and the unadjusted index was 4.0 percent lower. Purchases, however, were 51 percent higher than the same week in 2020. Refi Index vs 30yr Fixed Purchase Index vs 30yr Fixed "Mortgage rates...(read more)

4/7/2021 7:43:43 AM

Posted To: MBS Commentary

Evidence For a Ceiling Continues to Accumulate All the normal disclaimers are in order: - This is a rising rate environment until proven otherwise. - Floating is best thought of as an intraday endeavor. - Things can always change very quickly. - Any notion of a ceiling is best measured in days and weeks for now. And the list goes on. With the disclaimers out of the way, we can talk about the mounting evidence for a consolidation that puts an end to the rising rate trend of early 2021. Today may be the first day where it makes any sense to do so, even if it falls well short of making any guarantees. Econ Data / Events Fed MBS Buying 10am, 1130am, 1pm Market Movement Recap 08:29 AM Bonds added to yesterday's late-day strength with a bit of follow-through in Asia. EU bonds were weaker at the...(read more)

4/6/2021 3:25:02 PM

Posted To: Mortgage Rate Watch

Things have been bad for mortgage rates in 2021. That assertion has nothing to do with the outright level of mortgage rates--indeed, that's still very low historically--and everything to do with the pace and duration of the rate spike. Like many things, there comes a certain point at which things have been bad enough for long enough that they can't help but improve. Have we reached that point with the rate spike of 2021 and is today the proof? Let's not tempt fate , and let's be realistic . As far as rate spikes go, there have been worse examples. In fact, even as recently as 2016, one could argue some of that movement was worse than what we've seen in 2021. And if we go back another few years, there's no question that 2013 was much tougher than the current environment. Things can definitely...(read more)

4/6/2021 3:25:00 PM