Posted To: Mortgage Rate Watch

Mortgage rates launched to their highest levels in more than 3 months yesterday for a variety of reasons. Chief among them was a series of comments from both China and the US about the intent to cancel previously announced tariffs as a part of the phase 1 trade deal. Tariffs and trade have been weighing on the economic outlook in a big way, and that's benefited interest rates. Anything that lessens the weight has the opposite effect. Notably, the bond market failed to improve very much today even after Trump said that there was no agreement to roll back tariffs yet, even though there was a clear reaction. This could be due to the fact that markets expect a deal to be worked out eventually, but bigger-picture momentum is also a consideration. Simply put, rates have been moving so much lower...(read more)

11/8/2019 3:17:00 PM

Posted To: MND NewsWire

One year after hitting a ten-year low, housing affordability has risen to its highest level in three years. Rose Quint, writing in the National Association of Home Builders Eye on Housing Blog , says 63.6 percent of new and existing homes sold in the third quarter of this year were affordable to households earning the U.S. median income of $75,500. It was exactly one year ago when Quint wrote that only 56.4 percent homes sold during Q3 of 2018 were affordable to families who were earning the then current median income of $71,000. At that point the prevailing interest rate was 4.72 percent and the median home price was $268,000. The NAHB/Wells Fargo Housing Opportunity Index (HOI) had risen to reflect 60.9 percent affordability by the second quarter of this year. The improved affordability is...(read more)

11/8/2019 1:01:40 PM

Posted To: MND NewsWire

The share of first-time buyers remains well below historic levels according to the National Association of Realtors' ® (NAR's) 2019 Profile of Home Buyers and Sellers, and those who do buy frequently need financial assistance from their family. The annual report, derived from a 125-question survey that NAR mails to buyers who purchased a home between July 2018 and June 2019, will be unveiled Friday afternoon at NAR's annual convention. First-time buyers account for one-third of sales, a share that hasn't changed much since the financial crisis. Historically those buyers have constituted about 40 percent of the market. Further, one third of first-time buyers use downpayment help from family or friends. "Prerecession, the number of first-time buyers was higher, in part, because buyers had...(read more)

11/8/2019 11:12:50 AM

Posted To: MBS Commentary

If you don't expect anything good to happen for the bond market for the next few months, I guarantee you won't be disappointed. If, however, you expect to see a normal amount of resilience and a continued willingness on the part of rates to operate with a 3% handle in the 30yr fixed mortgage world, I cannot make that same guarantee. Grim stuff, I realize, but fortunes wax and wane when it comes to big-picture bond market momentum. Fortunes waxed bigtime throughout 2019 and it increasingly looks like the bill is due. If you're new to my commentary, this narrative has been in place since mid October when rates failed to make it back to September's lows. All of the above having been said, I can't unequivocally guarantee that we've entered a new rising rate trend that will...(read more)

11/8/2019 8:12:57 AM

Posted To: Pipeline Press

As rumors swirl about Michael Bloomberg entering the race for president, MLOs are winding down for the year (a few have written to me saying that, after a solid November and 2019, they’ll be coasting during December and try to push closings into 2020 to get a good start on things), and it’s around this time when capital markets crews are answering the yearly, “When are the 2020 conforming loan amounts going to be released, and what are they going to be?” Just to remind you, they are announced around/soon after Thanksgiving. And oddsmakers in Las Vegas are looking for a slight bump. But hey, those jumbo programs, without the 50-basis point or so gfee, are pretty price competitive, so there doesn’t seem to be the big need for higher conforming limits as there was...(read more)

11/8/2019 7:37:16 AM

Posted To: MND NewsWire

The storm is over, the fires are out, but anyone who has survived a natural disaster, and that is more of us every year, knows that the problems are just beginning. A new report by CoreLogic looks at how a demand surge sparked by rebuilding efforts may or may not affect the recovery in a disaster's aftermath. By demand surge they are referring to a sudden increase in the costs of materials, labor, or other services which can ultimately increase reconstruction costs and in some cases, limit the ability of property owners to recover in a timely matter. This is particularly true where the victims are underinsured or not insured at all. They found that the growth of major chains like Lowes and Home Depot has mitigated the effect of a demand surge on materials , both their availability and cost...(read more)

11/8/2019 7:04:44 AM

Posted To: MBS Commentary

It was a big, bad day for the bond market, although the size of the thing ended up getting pared down just a bit in the afternoon. Chalk that up to a counterpoint headline that pushed back against the narrative created by the day's previous headlines. The narrative in question concerns the US/China trade pact. Most recently, the notion of rolling back previously announced tariffs has taken center stage. Overnight headlines set the tone with China's Commerce Minister saying the two countries had agreed to cancel tariffs in different phases. Similar headlines from the White House added to the same momentum during the AM trading hours. Combine that with a bond market that was already on edge in terms of the technical landscape (you know... all that stuff I've been talking about with...(read more)

11/7/2019 5:21:48 PM

Posted To: Mortgage Rate Watch

Mortgage rates surged higher at a rapid pace for the second time this week. Taken together, the jump is the biggest of its kind since the big rate spike in September, and one of only a handful of weeks in the past 3 years where lenders are quoting rates that are 0.25% higher than the previous week. Progress on the US/China trade deal is the key culprit behind the volatility, but not the only factor. In general, the bond market (which dictates rates) has been doing so well for so long that risks of a bounce have been increasing simply due to doubts as to how long the good times could continue to roll. In market jargon, these motivations are referred to as "technical." Technical motivation can play out differently depending on the market in question. Unlike the stock market, which has proven...(read more)

11/7/2019 4:29:00 PM

Posted To: MND NewsWire

Are home price increases cranking up again? The quarterly report from the National Association of Realtors® (NAR) on existing home sales and metropolitan home prices seem to indicate that is the case. NAR says that the overwhelming majority of the metro areas they track experienced both price gains and very limited inventory growth in the third quarter of the year. Further, after months of decelerating price gains, the annual increase nationally in the third quarter was 5.1 percent. "Incremental price increases are to be expected, but the housing market has been seeing reacceleration in home prices as more buyers want to take on lower interest rates in the midst of insufficient supply," said Lawrence Yun, NAR chief economist. "Unfortunately, income and wages are not rising as fast and will...(read more)

11/7/2019 10:29:55 AM

Posted To: MBS Commentary

Yesterday brought a brief reprieve for bonds after the first 2 days of the week threatened to confirm a big picture shift toward higher rates (or at least to build a case for such things). But much like the brief rally in the middle of last week, yesterday's rally proved to be a head fake, only this time, it was even less convincing. In fact, it took place entirely within the confines of the weeks-long uptrend in rates (white lines in the chart). Now today, bonds started out in significantly weaker territory after overnight trade headlines rocked both sides of the market (good for stocks, bad for bonds). MBS Live subscribers can get caught up with that move HERE . The losses are already pushing the upper limit of the shorter-term trend. 1.90-1.94 is an important line in the sand for yields...(read more)

11/7/2019 9:37:08 AM