Posted To: MBS Commentary

Another Green Day, But Can We Trust It? Bonds were briefly weaker mid-morning, but rallied back to close at slightly stronger levels. We've been defensive about the upward trend in rates for more than a month now and generally on the lookout for enough of a rally to let our guard down a bit. With the past 3 business days seeing anywhere from modest to moderate improvements, is it time to conclude we've seen the worst of the recent drama? In a word: no. Bonds have a lot more ground to cover before we'd think about that as something more than just another possibility. Even then, we're expecting a fair amount of volatility surrounding next week's Fed announcement. Econ Data / Events Fed MBS Buying 10am, 1130am, 1pm Case Shiller Home Prices m/m 1.2% FHFA Home Prices m/m 1.0...(read more)

10/26/2021 3:08:03 PM

Posted To: Mortgage Rate Watch

Mortgage rates hit 6 month highs by the end of last week, but they've been cautiously recovering since then. The rebound traces a similar pattern in the bond market, as is typically the case considering lenders rely on bonds as the primary ingredient in the interest rate recipe. In simpler, more normal times, bonds would be primarily concerned with economic reports, inflation, and government debt issuance. All of those things still matter, but because of covid, the market is picky about which economic reports it views as important. More importantly, the Federal Reserve's bond buying program is an even bigger consideration at the moment. It is universally assumed that the Fed will begin reducing its bond purchases soon and that they will announce that intention next Wednesday. Even though everyone...(read more)

10/26/2021 3:08:00 PM

Posted To: MND NewsWire

Freddie Mac reported this week that its total mortgage portfolio increased at an annualized rate of 17.4 percent in September compared to a 23.7 percent gain in August. The portfolio balance at the end of the period was $3.137 trillion compared to $3.093 trillion the prior month and $2.613 trillion a year earlier. Purchases and Issuances totaled $112.333 billion, and Sales were ($498) billion. The August numbers were $119.682 billion, and ($277) billion, respectively. Single-family refinance loan purchase and guarantee volume was $59.8 billion in September compared to $65.7 billion in August, representing a 58 percent share of total single-family mortgage portfolio purchases and issuances, unchanged from the share in August. Purchases in Freddie Mac's Mortgage Related Investments Portfolio...(read more)

10/26/2021 9:49:27 AM

Posted To: MND NewsWire

Sales of newly constructed homes surged unexpectedly in September, reaching the highest rate since March . However, a downward revision in the August numbers left sales still significantly below those a year earlier. The U.S. Census Bureau and Department of Housing and Urban Development said newly constructed single-family homes sold at a seasonally adjusted annual rate of 800,000 units during the month. This was a 14.0 percent gain from the 702,000-unit pace in August. That estimate was originally reported at 740,000 units. Sales in September 2020 were at a seasonally adjusted rate of 971,000 units, 17.6 percent above this September's sales pace. Analysts polled by both Econoday, and Trading Economics had a consensus forecast of 760,000 in sales. Sales on an unadjusted basis during the month...(read more)

10/26/2021 9:48:11 AM

Posted To: Pipeline Press

Lenders and servicers don’t like weather extremes. Hurricane season is nearly over. While the East Coast is bracing for a storm, however, it’s feast or famine in the West, when, in the span of a few days, large swaths of land go from drought and fires to rain and flooding. And lenders and servicers are impacted: who wants to own the collateral on a $300,000 debt when it is threatened by fires, floods, hurricanes, or tornadoes? Or ghosts. Do you believe in ghosts? Me neither… but I wouldn’t want to upset any of them in case they’re in the attic. In at least nine states, there is a law that requires home sellers to disclose if there was a recent death on the property, and the great state of New York goes so far as to have it be illegal in some circumstances to sell...(read more)

10/26/2021 9:46:00 AM

Posted To: MBS Commentary

At the start of the trading session, Treasuries have the distinction of trading through the overnight hours with the lowest volume and volatility in more than a month. That's either a coincidence, or the first major sign that bonds are settling into a sideways, narrow, consolidation pattern ahead of next week's much-anticipated Fed announcement. With 3 days of Treasury auctions and a few important pieces of data on tap, we'll avoid jumping to that conclusion just yet though. Perhaps more interesting--even if it's not a market mover--is this morning's 1.0% increase in the FHFA home price index as it accounts for the 2nd to last month of data required to arrive at the new conforming loan limits one month from today. While the headline HPI differs slightly from the expanded...(read more)

10/26/2021 8:28:12 AM

Posted To: MBS Commentary

Nice Recovery, But Big-Picture Damage Remains Monday could have been worse. Bonds started out in weaker territory but recovered early in the domestic session. Technicals and repositioning tradeflows deserve as much credit as dovish remarks from the Bank of England. Ultimately, the intraday volatility doesn't much matter as long as yields remain squarely inside their upwardly-sloped trend channel (and they do!). Econ Data / Events Fed MBS Buying 10am, 1130am, 1pm Market Movement Recap 08:40 AM Flat to start the overnight session, then slightly weaker in Europe. Well inside Friday's range, up 2.5bps at 1.663% (10yr), and 2.5 UMBS down 2 ticks (0.06). 09:32 AM Solid buying since 9am. 10yr back to unchanged at 1.64 and 2.5 UMBS now up 2 ticks (.06) at 102-08 (102.25). 02:05 PM Rates bottomed...(read more)

10/25/2021 3:17:23 PM

Posted To: Mortgage Rate Watch

Mortgage rates began the day right in line with Friday afternoon's latest levels. Lenders likely would have been able to offer lower rates if the bond market hadn't begun the day at weaker levels (bond market weakness = higher rates, all other things being equal). As the day progressed, bonds improved enough for most lenders to make positive adjustments. The so-called mid-day reprices left the average lender in just slightly better shape on the day. For perspective , today's rates--apart from last Friday's--are the highest in more than 6 months. Additionally, rates have been rising steadily since August, and relatively sharply since late September. This is occurring as the market prepares for the Federal Reserve to announce a reduction in its bond purchases on November 3rd (which has been so...(read more)

10/25/2021 2:45:00 PM

Posted To: Pipeline Press

Given my emails and hallway chatter in San Diego last week, what’s on people’s minds? The state of the housing market is one, and Ivy Zelman, CEO of Zelman & Associates and author of “ Gimme Shelter ,” co-hosts The Mortgage Collaborative’s Rundown with Rich Swerbinsky, the COO of The Mortgage Collaborative, and me as we discuss current events in the housing market for 45 minutes on Friday at 3PM ET in “The Rundown with Rich and Rob.” Several readers have asked me about AEI's Housing Center recent report which critiques The Markup/Associated Press's recent analysis on racial disparities in mortgage decline rates. “Our research finds that contrary to The Markup/Associated Press's report, HMDA data on purchase loans do not show evidence of systemic...(read more)

10/25/2021 9:50:55 AM

Posted To: MBS Commentary

10yr yields hit a long-term ceiling of 1.776 on March 30th, 2021 as bonds quickly priced in vaccine efficacy and fiscal policy. Several sideways months gave way to a delta-inspired rally. Political gridlock and persistently friendly Fed policy helped. With case counts subsiding again and the Fed certain to announce tapering soon, rates are once again testing ceilings as yields cracked back up into the 1.70+ realm last week before bouncing back down. The new week begins with that ceiling being reinforced, for now. The first chart shows HOURLY candlesticks including the first few hours of trading in the new week. Here's where those technical levels fall in the bigger picture: While it's all well and good to talk about range ceilings remaining intact, it's worth noting that not all...(read more)

10/25/2021 9:48:08 AM