Posted To: Mortgage Rate Watch

Rates are appreciably higher than they were last week or indeed any time in past 4 weeks. That's surprising news to those laboring under misapprehensions created by widespread reports of "all-time low rates" from last week. As we discussed yesterday, those reports were based on weekly survey data from Freddie Mac and the MBA, and there are reasons that they don't accurately reflect the day-to-day rate offerings you're actually likely to encounter from the average mortgage lender. This is infinitely more true for refinances due to the new adverse market fee (which only affects refis). To clear up some confusion that seems rather persistent, the new fee for refis has a deadline that applies to mortgage lenders "delivering" or "securitizing" their loans by December 1st. Lenders only control when...(read more)

10/21/2020 3:32:00 PM

Posted To: MBS Commentary

Bonds Find Footing Early, But Aren't Able to Go Green It's safe to say the bond market found its footing today, but that is only a reference to TODAY (not necessarily "finding footing" in the bigger picture). In terms of 10yr yields, overnight highs gave way to slightly lower highs in the morning and another small improvement in the afternoon. None of that was enough for bonds to turn positive on the day, but of the potential "bad days" we could have had, this is one of the better ones. Econ Data / Events 20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th) Market Movement Recap 08:50 AM Big selling overnight (i.e. higher yields), both out of the gate and in 2 other individual bursts (10:12pm and 12:26am ET). That brought yields up to .836%, but they've...(read more)

10/21/2020 3:25:08 PM

Posted To: MND NewsWire

The most recent Fannie Mae's Lender Sentiment Survey focuses on the complexities of lending to the condominium market. The company stresses that this type of housing can play an important role in narrowing the supply gap for affordable housing options as well as providing an attractive alternative for homeowners seeking to downsize. However, since the great recession, there has been a significant shortage of both new and existing units for sale. Condos represent 8 to10 percent of the mortgage market but tend to exist primarily and thus play a larger role in many urban areas. They also present unique risks given the financial responsibility owners share for the operation and maintenance of the common areas and shared amenities. Lenders may also face increased time and costs due to the complexity...(read more)

10/21/2020 10:04:15 AM

Posted To: MND NewsWire

The Mortgage Bankers Association (MBA) says there was little change in mortgage application activity during the week ended October 16. MBA's Market Composite Index, a measure of mortgage loan application volume, dipped 0.6 percent from the prior week on a seasonally adjusted basis and was down 1.0 percent unadjusted. Refinancing was also flat. The Refinance Index increased 0.2 percent from the previous week although activity remained well ahead of a year earlier, up 74 percent. The refinance share of mortgage activity increased to 66.1 percent of total applications from 65.6 percent the previous week. Applications for home purchasing fell for the fourth straight week , and for the seasonally adjusted index it has consistently been a 2.0 percent weekly decline. The unadjusted index was also...(read more)

10/21/2020 9:53:41 AM

Posted To: MBS Commentary

There have been reasons to fear a momentum shift in bonds for several weeks now. Here's how we discussed it at the beginning of October: "It's never a bad idea to consider risks on the road ahead--especially when things start deteriorating at the beginning of the month. We often see a shift in momentum with a new month when the previous one was fairly consistent with a certain theme. September's theme was definitely consistent." We went on to discuss a small scale breakout of a consolidation pattern that occurred well inside the already super narrow .62-.72 range. At the time, we concluded that things would be getting more serious when the .72 ceiling gave way. 4 days later, it did. The entirety of the 10/5 - 10/9 week was spent bouncing at the 0.79% technical ceiling...(read more)

10/21/2020 8:40:31 AM

Posted To: Pipeline Press

Want some guidance? “If you get a loan at a bank, you’ll be paying it back for 30 years. If you rob a bank, you’ll be out in 10 years. Follow me for more financial advice!” Plenty of MLOs will need financial advice, given their continued record production months and quarters. Ask anyone who had all their retirement money in the company they worked for, like WAMU, Nat City, Countrywide, or Lehman Brothers, about the benefits of diversification. There continues to be optimism in the residential lending community (not so much in the commercial lending arena as leases expire). The challenge for lenders now, as it appears the typical winter doldrums won’t occur this year given rates, is in staff hiring, training, motivation, and hiring. It is the opposite from a year...(read more)

10/21/2020 8:13:00 AM

Posted To: Mortgage Rate Watch

It began last week. It was subtle--so subtle as to pass largely unnoticed. But the gentle drift toward slightly higher rates has taken bigger steps so far this week. As of this afternoon, the average lender is quoting the highest rates since late September! That's quite a realization when juxtaposed with last week's (misleading) headlines about "all-time lows." If the highest rates in nearly a month sound scary, don't freak out just yet. During that time, rates have held inside one of their narrowest ranges ever. By the time we consider how low rates are in the bigger picture there's actually never been a comparable example of "this low for this long." The lift-off hasn't proven to be too alarming just yet either. Many lenders are still quoting the same note rates today versus their recent...(read more)

10/20/2020 3:41:00 PM

Posted To: MBS Commentary

Bearish Bond Trend Continues Looking back at MBS or Treasuries over the past few weeks reveals a clear termination of a rally trend at the end of September and a similarly well-established bearish trend throughout October. Treasury yields are the highest since early June and MBS aren't too far away from their weakest levels in months. Stimulus prospects continue applying pressure, but we should also consider the same discussion we had at the end of September. Simply put, sometimes momentum just runs the other direction with the start of a new month--especially if the previous month was moving almost exclusively in the other direction. Econ Data / Events 20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th) Housing Starts 1.415m vs 1.457m f'cast, 1.388m prev Building Permits...(read more)

10/20/2020 3:32:27 PM

Posted To: MND NewsWire

Mark Calabria, director of the Federal Housing Finance Agency (FHFA) used the annual convention and expo of the Mortgage Bankers Association to announce changes in the agency's requirements for certain operations of the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. FHFA is seeking comments on a proposed rule requiring the GSEs to provide advance notice to FHFA of new activities and to obtain prior approval before they launch any new products. The rule establishes revised criteria for determining if such notice is required and determining if an activity is a new product that merits public notice and comment. In a press release that accompanied Calabria's announcement at the virtual MBA event, the agency said it is obligated to ensure Fannie and Freddie stay focused on their...(read more)

10/20/2020 11:04:01 AM

Posted To: MND NewsWire

Residential construction resumed its upward trend after a brief pause in August. The U.S. Census Bureau and Department of Housing and Urban Development reported that all three measures of construction, permitting, housing starts, and unit completions, increased in September. Permits for privately owned residential construction were issued at a seasonally adjusted annual rate of 1,553,000, up by 5.2 percent from the 1,476,000-unit annual rate (revised from 1,416,000) in August. The increase from the previous September's rate of 1,437,000 units was 8.1 percent. Analysts had expected permits to recover from their slight (0.9 percent) downturn in August but those polled by Econoday had a consensus of only 1,451,000 units. Even the high end of their 1,375,000 to 1,500,000 forecast range was well...(read more)

10/20/2020 10:10:43 AM