Posted To: Mortgage Rate Watch

Mortgage rates were mostly steady today for most lenders. Those who changed generally did so in a friendly direction. Either way, that means today's rates remain in line with all-time lows. It also makes them markedly lower than last week. Despite that fact, you're more likely to see news about rates rising just a bit week-over-week. Who's telling you the truth? To be fair, no one is lying to you. It's just a question of timing and data sources. Freddie Mac publishes a weekly rate survey every Thursday morning. It's widely relied-upon as source material for all manner of media outlets. The issue is that it is based primarily on responses received on Monday and Tuesday. The 2nd half of the week isn't even counted. That means Freddie's data missed the week's best improvement yesterday afternoon...(read more)

5/21/2020 2:50:00 PM

Posted To: MND NewsWire

Existing home sales fell hard in April, the numbers coming in about where analysts expected them but breaking a nine-month string of annual gains. The National Association of Realtors® said total sales of single-family homes, townhouses, condos, and cooperative were at a seasonally adjusted annual rate of 4.33 million, down from the 5.27 million sold in March, a 17.8 percent decline. It was the lowest level of sales since July 2010 (3.45 million) and the largest month-over-month drop since July 2010 (-22.5 percent). The loss, which NAR said was due to the coronavirus pandemic, brings the aggregate decline over the last two months to 26.3 percent. Sales are now down 17.2 percent from the 5.23 million rate in April 2019 The rate of sales almost matched the 4.325 million-unit consensus estimate...(read more)

5/21/2020 10:33:46 AM

Posted To: MND NewsWire

Interest rates on closed loans continued to decline in April, falling from 3.65 percent in March to 3.48 percent according to the Origination Insight Report from Ellie Mae. That prompted another surge in refinancing , with that portion of originations jumping from 55 percent in March to 65 percent. The refinancing share of conventional loans also rose 10 percentage points to 73 percent. The share of conventional loans also surged , from 76 percent to 81 percent and continuing a trend that began in January. Conventional loans accounted for 71 percent of originations that month. The April share of FHA loans dropped 3 points to 10 percent in April and the VA share dipped to 1 point to 6 percent. The time to close all loans increased from 40 to 42 days, although refinancing time lengthened by four...(read more)

5/21/2020 8:58:50 AM

Posted To: MND NewsWire

Maybe all of the talk about ending the GSE's long term incarceration in conservatorship is more than talk this time. Earlier this week both Freddie Mac and Fannie Mae announced they would be issuing Requests for Proposals (RFPs) seeking to hire financial advisors to that end. Then, late Wednesday, the Federal Housing Finance Agency (FHFA), the GSE conservator, said it was seeking comments on proposed revisions to its own 2018 proposal to establish a new regulator capital framework for the two companies. FHFA said the changes to its proposal "ensure each [GSE's] safety and soundness and its ability to fulfill its statutory mission across the economic cycle, in particular during periods of financial stress. The re-proposal is also a critical step toward responsibly ending the conservatorships...(read more)

5/21/2020 8:13:26 AM

Posted To: MBS Commentary

Treasuries held onto yesterday's gains in the overnight session and are starting the day in slightly better shape (MBS are roughly unchanged). This means that 10yr yields continue adhering to a technical pattern we've been following for the past few weeks AND that we may get to see that pattern put to the test in the day ahead. The pattern in question is one of the simplest: a trend channel consisting of parallel lines drawn along the recent highs and lows in any given market instrument. Placement of these lines is open to some degree of interpretation. For instance, in our version, I have the lines set based on opening and closing levels and some of the intraday noise has been tuned out. That doesn't mean the intraday levels are irrelevant, just that I needed/wanted lines that...(read more)

5/21/2020 8:03:26 AM

Posted To: Pipeline Press

Some lenders and vendors are easing back into offices, or at least planning voluntary phases. (Hmmm… wear a mask and have 2 per elevator, or work from home with no commute and wear sweats. Let me think.) Instead of thermal scanners in every office lobby, can’t we just have our mothers kiss our foreheads to test our temperature like when we were kids? And when we were kids, we could get away with saying, “I don’t wanna!” Apparently some still can say that when it comes to making mortgage payments, since 4.1 million borrowers are in forbearance right now but, per Forbes, over 70% don't need the help ! The FHFA is keeping abreast of forbearance trends, and it released a notice of proposed rulemaking (NPR) outlining a new capital rule for the Enterprises (aka, Freddie...(read more)

5/21/2020 8:00:28 AM

Posted To: Mortgage Rate Watch

Mortgage rates fell again today. Whereas yesterday's improvements arrived in choppy fashion only after many lenders quoted higher rates in the morning. Today's improvement was more conclusive and more consistent from lender to lender. While there were a handful of mid-day improvements in response to bond market strength, most lenders were at least as low as they'd ever been to start the day. Many lenders were decidedly lower, bringing the average top tier conventional 30yr fixed quote dangerously close to cracking below the 3.0% barrier. If you're hearing about rates in the high 2% range, shaking your head, and scoffing , know that you are not alone. It continues to be the case that rate offerings vary quite a bit from lender to lender. They can also be vastly different for different scenarios...(read more)

5/20/2020 4:53:00 PM

Posted To: MND NewsWire

With the number of homeowners under forbearance plans nearing 10 percent of all of those having a mortgage, a Lending Tree survey indicates that most of those borrowers did not actually need the help. One quarter of the homeowners surveyed by the company said they had applied for forbearance because of a COVID-19 hardship, and of those, 80 percent were granted one. However, only 5 percent said they wouldn't have been able to pay their mortgage without forbearance. Lending Tree says that lenders typically require borrowers to prove they're experiencing a financial hardship in order to qualify for forbearance. However, the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by Congress lets homeowners with government-backed loans apply for forbearance without having to prove a hardship...(read more)

5/20/2020 9:44:50 AM

Posted To: MBS Commentary

I've been mentioning MBS outperformance and underperformance quite a bit recently, but what do these terms really mean and why do we care? First off, we always care about strength and weakness in mortgage bonds as they are the primary building block in determining mortgage rates (i.e. higher MBS prices = lower rates , all other things being equal). We also care about strength and weakness in Treasuries because mortgage bonds typically correlate amazingly well with Treasuries (so much so that many mistakenly believe 10yr Treasury yields serve as a basis for mortgage rates). The type of volatility seen in March exposed a few eye-opening truths. The first was that mortgage bonds can and do deviate from 10yr yields at times. March offered the most extreme example we've seen since the financial...(read more)

5/20/2020 8:50:00 AM

Posted To: Pipeline Press

Jury trial by Zoom? Leave it to Texas to give it a shot. Michigan and Indiana are now offering the bar exam online for aspiring attorneys. Out of Pennsylvania comes news that Gov. Tom Wolf issued an executive order that allows real estate to open on a statewide basis effective yesterday, subject to certain guidelines. Florida has entered “Phase 1” of re-opening, with gyms, retail stores, and restaurants at 50 percent capacity. California , home to nearly 25% of the residential mortgage production of the United States, has entered “ Phase 2 ” but of great concern to every residential lender is AB 2501 with its draconian penalties. (Here’s an analysis of the bill which yesterday moved from the Assembly Banking Committee to its Appropriations Committee.) Nationwide...(read more)

5/20/2020 7:47:18 AM

Posted To: MND NewsWire

Purchase mortgage applications extended their recent run of gains through the week ended May 15. The Mortgage Bankers Association (MBA) said its Purchase Index rose 6 percent compared to the previous week on both a seasonally adjusted and unadjusted basis. It was the fifth straight week of improvement, and the index, which was down by as much as 35 percent from a year earlier in much of April has narrowed that gap to 1.5 percent. MBA's Market Composite Index, a measure of overall application volume, was down 2.6 percent on a seasonally adjusted basis and 2 percent unadjusted, dragged down by the 5 th consecutive decline in refinancing. The Refinancing Index fell back by 6 percent compared to the prior week, but was still 160 percent higher than during the same week in 2019. Refinancing applications...(read more)

5/20/2020 7:25:56 AM

Posted To: Mortgage Rate Watch

Mortgage rates were mixed this morning, depending on the lender. The more responsive lenders had already bumped rates higher yesterday in response to weakness in the bond market and were thus able to offer modest improvements this morning, or at least relatively flat pricing. Other lenders were noticeably weaker (aka higher in rate). As the day progressed, the underlying bond market improved fairly decisively. This allowed most every lender to offer lower rates by the end of the day. While this wasn't enough to get us back to the all-time lows seen at times in the previous 2 business days, it was definitely a step in the right direction. It remains to be seen if this was a sign of things to come or merely a correction to yesterday's bigger market movement. The average lender remains in the...(read more)

5/19/2020 3:50:00 PM

Posted To: MND NewsWire

Homeowners who have been granted forbearance from making full payments on their GSE guaranteed loans during the COVID-19 crisis may still be able to refinance or buy a new home when the crisis ends. The Federal Housing Finance Agency (FHFA) has announced that Fannie Mae and Freddie Mac will permit borrower to obtain a new mortgage under the following conditions . 1) They have reinstated their mortgage or have continued to make their mortgage payments despite being in forbearance or 2) where forbearance has ended, eligibility will be dependent on making three consecutive payments under a repayment plan, a loan modification, or the recently announced payment deferral option. "Homeowners who are in COVID-19 forbearance but continue to make their mortgage payment will not be penalized ," said Director...(read more)

5/19/2020 12:43:38 PM

Posted To: MND NewsWire

The April residential construction numbers are, of course, horrible. But they aren't out of line with expectations, and builders did continue to plan for expansion and to build. The U.S. Census Bureau says that construction permits fell 20.8 percent compared to March, and housing starts were down 30.2 percent. Here are the gruesome details. The April decrease in permits put the seasonally adjusted annual rate at 1,074,000 units, down 19.2 percent year-over-year. The March estimate, which had represented a 6.8 percent decrease from February as the COVID-19 shutdowns were starting to happen, was actually revised slightly higher, from 1,353,000 to 1,356,000. Analysts has expected permits to be in the range of 750,00 to 1,150,000 units on an annual basis. The consensus of those polled by Econoday...(read more)

5/19/2020 9:16:25 AM

Posted To: Pipeline Press

It’s one thing to have confusion & bickering over whose turn it is to put the Scrabble tiles away face down after the game. It’s a whole different level when it comes to forbearance. As STRATMOR’s Seth Sprague puts it, “The forbearance airplane is being built as we’re flying it!” Servicers report that borrowers fall into four broad categories: No forbearance requested, forbearance requested but still making their payments, forbearance requested and being carried out, and borrowers who were delinquent pre-COVID but do not qualify for forbearance. But wait, there’s more! Investors for Agency loans further segregate those loans into (price/approval/product/purpose) buckets based on when the loan was sold to an investor, or to an Agency, and any events...(read more)

5/19/2020 8:34:07 AM

Posted To: MBS Commentary

Yesterday was pretty rough for bond markets as 10yr yields rose the better part of 10bps in fairly short order. It was the worst day of selling in 2 months and it took us to the highest yields since mid April. To make matters worse, it followed what could easily have been viewed as a strong signal for bond buying. The following chart shows 10yr Treasury yield candlesticks. Red is bad. Green is good. The wavy lines at the bottom are stochastic oscillators. The green one is a based on shorter-term math. It's more reactive to any given move in bonds. The red one is slower moving. When both of them agree, and especially if yields themselves are breaking through a simple trend line (such as the lower yellow line from the trend channel in the top part of the chart), it's about as good of...(read more)

5/19/2020 8:17:00 AM

Posted To: MND NewsWire

Fannie Mae and Freddie Mac (the GSEs) have taken what each is calling an important step toward ending their 12 years of operating under conservatorship. Each has announced they are about to issue a request for proposals (RFP) to secure a financial advisor to facilitate that move. In a press release, Freddie Mac said the advisor selected will "advise the company on a range of issues, from capital considerations to the company's business plan, and may ultimately play a role in any potential recapitalization transactions in the future" The GSE's were put into conservatorship in August 2008 as losses mounted from defaulted mortgages they had guaranteed. The Treasury Department then gave them access to billions of dollars in operating capital in return for an equal amount of their senior preferred...(read more)

5/19/2020 7:35:37 AM

Posted To: Mortgage Rate Watch

Mortgage rates hit all-time lows on Friday, based on the average rate for a top tier conventional 30yr fixed loan scenario. At that time, I raised the question as to whether that was really "news" considering we were already in line with all-time lows on Thursday and that rates have generally been pushing into an all-time low range during the coronavirus saga. In fact, as far as bond markets are concerned (and they're typically all that matters), we should have seen 10-20 days of new all-time lows so far in 2020. It's only due to the COVID-related mortgage market effects that mortgage rates have been on a delayed timeline relative to the broader bond market. So can we rest assured that rates will continue to press into all-time lows in a gradual manner? Actually, no... not if today is any indication...(read more)

5/18/2020 3:44:00 PM

Posted To: MND NewsWire

IBuyers, that new label for real estate agencies that buy homes from sellers rather than just listing them, are back in the hunt. Redfin announced late last week that its RedfinNow subsidiary was about to resume operations, joining Opendoor and Offerpad which have already reopened after COVID-19-driven shutdowns. Zillow has said it would gradually relaunch its Zillow Offers division in upcoming weeks. But Redfin CEO Glenn Kelman made a more startling statement as well. In an interview with Jacob Passy published in MarketWatch , he declared that vacation markets are "toast," and AirBnb owners are rushing to unload their properties. They are going too be in tough shape, he said. "There's a whole economy that was built around the liquidity there that Airbnb provided. You could get pretty deep...(read more)

5/18/2020 3:43:38 PM

Posted To: MND NewsWire

Nearly all financial indicators took a hit last month as unemployment measures shot higher, businesses shut down, and consumers and their families self-quarantined. Probably none of those measures suffered a bigger bloodbath than the Housing Market Index (HMI) sponsored by the National Association of Home Builders (NAHB) and Wells Fargo. The index, which measures NAHB's home builder members confidence in the market for newly constructed homes, typically moves 1 or 2 points higher or lower each month. In April it plunged 42 points , the largest monthly change in its more than 30-year history, ending up at a reading of 30. This month it clawed back some of those losses. The index rose 7 points, a signal according to NAHB "that the housing market is showing signs of stabilizing and gradually moving...(read more)

5/18/2020 9:39:40 AM