Posted To: MBS Commentary

There's age old market wisdom that loosely suggests any given move should be taken more seriously if there's a lot of volume behind it. Deductively, we might conclude that moves backed by exceptionally light volume could be taken less seriously. To whatever extent it makes sense to do such things (and it rarely makes sense to brush off market weakness), today would be one of the best candidates. Much of the rest of the world was closed for business in the overnight session, with the only heavy lifting being done by Tokyo (i.e. Japanese traders were primarily responsible for making trades that moved bond markets during those hours). That made for almost non-existent volume in the overnight session, and only a modest amount of weakness. The domestic hours saw additional weakness , however...(read more)

4/22/2019 3:43:25 PM

Posted To: Mortgage Rate Watch

Mortgage rates were higher again on Monday, but just barely. The average lender was still in worse shape on Tuesday or Wednesday of last week when rates were the highest they'd been in about a month. Rates reflect demand in the bond market. Bonds can be bought or sold for a variety of reasons, but one of the key reasons is the general levels of fear and optimism surrounding the economy. When investors are less certain about positive economic outcomes, they tend to buy more bonds. This results in rates moving lower. That sort of uncertainty reached a bit of a boiling point at the end of March when the Fed called out economic uncertainty in Europe and China as one of the biggest risks to the global economic outlook. Since then, however, some of the data suggests the sky may not be falling just...(read more)

4/22/2019 2:54:00 PM

Posted To: MND NewsWire

The question this morning was whether March's existing home sales could build on the strong numbers posted in February, an 11.8 percent increase from the prior month with a seasonally adjusted pace of 5.51 million. It was the largest gain in more than three years. The consensus was that they would not. The forecasters were spot on. The National Association of Realtors® (NAR) reports that sales of existing single-family homes, townhomes, condos, and cooperative apartments retreated from their February gains, with each of the four major U.S. regions falling back. The Midwest saw the largest decline although the West wasn't far behind. Total existing-home sales fell 4.9 percent from February to a seasonally adjusted annual rate of 5.21 million. Sales as a whole are down 5.4 percent from a...(read more)

4/22/2019 9:53:05 AM

Posted To: MBS Commentary

Are we or are we not headed toward a global economic contraction in mid-to-late 2019? Or are such things on hold for another year or two? Inquiring traders want to know. They'd been trading as if a contraction was a more imminent threat from November 2018 through late March 2019, but have been having second thoughts since then. Beyond the domestic economy, we have to keep an eye on Europe and China at the moment. Apart from simply being a good policy in general (it's a global economy, after all), paying attention to EU/China makes sense considering the Fed has explicitly said it's doing the same. Point being that any noticeable bounce in economic data in those two regions could lead the Fed to err on the side of less friendly monetary policy. We'll have to wait until next Wednesday...(read more)

4/22/2019 7:48:55 AM

Posted To: Pipeline Press

Remember NINA loans from 10-15 years ago where the lender would purposely discard anything in the file dealing with income because underwriters didn’t want documentation? Several lenders are now promoting no income, no asset non-owner loans. For example, 360 Mortgage is now promoting its NINA investor loans . We’re at the point where borrowers must prove that they won’t live there. (Speaking of rent, Quicken Loans has its new VRBO income program .) What if you don’t anyone to know where you are, physically? Sorry, “they” know where you are all the time . Authorities have obtained search “geofence” warrants that require Google to turn over data from a database known as Sensorvault . The warrants “specify an area and a time period, and Google...(read more)

4/22/2019 7:19:22 AM

Posted To: MND NewsWire

For the second month in a row we find ourselves stating that Fannie Mae's forecast , while still predicting a slowdown in economic growth this year, appears overall more upbeat than in the previous month . The April report is still predicting that growth will slow from 3.0 percent in 2018 (which is itself a revision from the 3.1 percent estimate that prevailed in March) to 2.2 percent this year. The boost provided last year by the Tax Cuts and Jobs Act is expected to fade, and business investment and consumer spending to slow. However, the company's economists expect residential fixed investment to recover from last year's decline. The timeline is for domestic growth to slow to 2.0 percent over the first half of 2019 from 2.8 percent over the second half of 2018 and then strengthen in the second...(read more)

4/22/2019 6:22:19 AM

Posted To: MND NewsWire

Contrary to expectations, all three of the residential construction measures from the U.S. Census Bureau and the Department of Housing and Urban Development fell in March . Not only were they lower than in February, but they were down year-over-year, and both permits and housing starts are running behind 2018 on a year-to-date (YTD) basis. The West was the only region to show any strength. Permits for residential units were at a seasonally adjusted annual rate of 1,269,000 units, a 1.7 percent decrease from the February estimate of 1,291,000. That estimate was also revised lower from an original estimate of 1,296,000. The March number was 7.8 percent lower than the rate a year earlier, 1,377,000 units. Analysts had expected permitting to range be at an annual rate of 1,300,000 units. Estimates...(read more)

4/22/2019 6:14:48 AM

Posted To: MBS Commentary

Global economic data is big business for the bond market these days. With no end in sight to the domestic economic expansion (note: 1.6% vs 0.9% f'cast in today's Retail Sales and another decades-long low in Jobless Claims), any recessionary risks have been pinned on the two biggest economies that have been sending the weakest cues: Europe and China. Earlier this week (and starting last Friday), Chinese economic data didn't do anything to help the cause of worrying about global growth. Overnight trading saw the China trade level off, however, thus opening the door for a raft of EU economic data to have its say. Among that data, it was the weaker German manufacturing PMI that set the tone overnight. German Bunds rallied sharply and pulled US Treasuries along for the ride. In the...(read more)

4/18/2019 12:31:04 PM

Posted To: Mortgage Rate Watch

Mortgage rates have generally been moving higher since March 28th after they bottomed out at the lowest levels in well over a year. At the time, investors were tuned-in to the Fed's concerns about the global economy. Granted, the US economy might not have been suggesting an imminent recession, but that was far more difficult to say about China and Europe. Both economies were clearly decelerating by the end of 2018 and into the first few months of 2019. That deceleration was the biggest risk factor for the global economy and the biggest boon for mortgage rates. Weak European economic data at the end of March helped drive the long-term low rates on March 27th. But that marked the apex of panic. We haven't seen any data quite as alarming since then and thus, the gradual increase in rates (economic...(read more)

4/18/2019 12:06:00 PM

Posted To: MND NewsWire

Continuing declines in interest rates had some impact along the margins of loan originations in March. Ellie Mae's Origination Insight Report for March reports that 30-year fixed-rate mortgages originated during the month had an average interest rate of 4.77 percent , down from 4.86 percent in February and 5.01 percent in January. The company reported that the share of originations that were for refinancing ticked up 1 percentage point to 35 percent during the month while the share among FHA loans jumped 3 percentage points to 23 percent. FHA's share of all originations also rose 1 point to 20 percent. The share of conventional and VA loans remained at 64 percent and 11 percent of the total respectively. Another possible impact of lower rates, the percentage of adjustable rate mortgages (ARMs...(read more)

4/18/2019 9:01:06 AM