Mortgage News Daily

  • Posted To: MBS Commentary

    By today, it became clear that bonds were fully locked into a sideways consolidation in a range defined by the highs seen on Wed/Thu and the lows marked by the 3.06% technical levels. Of the past 3 sideways days, today was the least volatile and most lenders saw fit to offer just slightly stronger rate sheets despite 'unchanged' levels in bond markets. Consolidations like this can happen simply because markets are catching their breath after a strong move or because they're settling down ahead of the next event that might cause a strong move. If we're dealing with the latter, the event in question is likely to be Wednesday's Fed events (announcement, press conference and updated rate hike outlook). Of those three, it's the(t "dots" he dot plot that conveys...(read more)

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    Created: 9/21/2018 2:28:25 PM
  • Posted To: Mortgage Rate Watch

    Mortgage rates actually fell today, on average--something they haven't been able to say all week, or indeed at nearly any time during the past 4 weeks. Yesterday, in particular, was the worst day for rates since 2011 for most lenders, with anything less than an ideal loan scenario garnering 30yr fixed quotes of 4.875% to 5.0%. With all of the above in mind, today's token improvement isn't necessarily exciting, but at least it's better than the alternative. Much of this week's rapid rise was seen in the first half of the week. Starting on Wednesday afternoon, markets began settling into a more sideways pattern, apparently getting in position for more volatility in the coming week. If there's an event that's likely to serve as the catalyst for that volatility, it's the Fed Announcement on Wednesday...(read more)

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    Created: 9/21/2018 1:46:00 PM
  • Posted To: MND NewsWire

    Even as flood water continue to sit in living rooms and kitchens across a large swath of North Carolina it is clear that most of those homes are not insured against the damage. Mary Williams Walsh, writing in the New York Times, says that in North Carolina and South Carolina, which suffered less widespread damage, only about 335,000 homes in total have flood insurance. The Urban Institute (UI) reports that the number of policies homeowners purchased through the National Flood Insurance Program (NIP) has declined over the last ten years and the total is now just over 5 million nationwide. There are also some private insurance policies, but nowhere near enough to cover the affected homes. Sarah Strochak, Jun Zhu, and Laurie Goodman used data from the Census Bureau's 2017 American Housing Survey...(read more)

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    Created: 9/21/2018 1:44:39 PM
  • Posted To: MBS Commentary

    More often than not, when I use the word "believe" (or belief), it's in some vague and positive context. For instance, something like "bond buyers are starting to believe again." That won't be the case today--at least not as far as the positive context is concerned. Today I want to talk about the beliefs that have radiated up from the short end of the yield curve over the past few years. They're like an infection that started in the toe but spread to more vital organs surprisingly quickly. The "yield curve" is just a fancy way of referring to the spectrum of time associated with various loans. The loans in this case are those taken out by the US government (via the Treasury Department) to finance all of its various spending. For instance, there are...(read more)

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    Created: 9/21/2018 7:15:22 AM
  • Posted To: Pipeline Press

    When I spent an hour interviewing Angelo Mozilo on stage last week for the American Pacific Mortgage Summit, one of the issues we discussed was the competitive environment for lenders, and the evolution of the mortgage loan originator. Angelo, who is very much in command of his game, is a strong believer in the strength of the relationship that originators have with their clients, and the future that originators have in the lending industry. Lenders always have their eyes on the horizon, watching the changing competitive environment, and along those lines I penned a piece for the STRATMOR Group titled “The Rise of the Credit Unions.” Fraud, Legal Chatter, Warnings Jonathan Foxx published, entitled “Mortgage Fraud Challenges: How to Catch a Crook.” “Tracking down...(read more)

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    Created: 9/21/2018 5:40:58 AM
  • Posted To: MBS Commentary

    After a series of demoralizing losses, it feels like some small victory for bonds to simply remain sideways today. That wasn't necessarily a given early this morning. In fact, yields hit new intraday highs for the week--the highest levels since May. Move down the curve just a bit and 5yr yields are at the highest levels since 2008--just another victim of the relentless move toward higher short-term rates. All that to say that the biggest risks to the long-term rate outlook have yet to subside. Rather, today simply suggests we may finally be leveling off before making the next big decision--something that seems likely to follow next week's Fed Announcement and updated rate hike outlook. As for specific market movers today, attempting to pin the tail on any particular donkey is a fool's...(read more)

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    Created: 9/20/2018 2:28:51 PM
  • Posted To: Mortgage Rate Watch

    Mortgage rates were mostly able to hold steady today, although they technically moved just a bit higher and that technically leaves them at the highest levels in 7 years. But hey! Let's focus on the positives... In terms of day-over-day changes, today was the best day of the week so far! To get an idea of where we are and why we're there, check out the last two days of commentary--always easily accessible here . As for today, it stands at least some chance to serve as the early stage of a ceiling for rates. Whether that proves to be true and how long such a ceiling lasts remains to be seen. In any event, next week's Fed announcement (Wednesday) has the greatest potential to kick off the next set of bigger moves. If volatility dies down between now and then, it would at least be better than...(read more)

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    Created: 9/20/2018 1:40:00 PM
  • Posted To: MND NewsWire

    It was a disappointment, but at least it wasn't a loss. Existing home sales, which were expected to increase in August after four straight months of declines instead remained unchanged from July. In fact, almost the entire report on August's existing home sales can be summarized by the word, "flat." Said sales of single-family homes, townhouses, condos, and cooperative apartments were at the seasonally adjusted rate of 5.34 million, identical to the July rate. Sales in July had fallen 1.5 percent below those from a year earlier, and that too was unchanged in the August to August comparisons. Existing home sales were selling at an annual rate of 5.42 million in August of last year. Econoday said the analysts it polls were expecting at least a modest increase after months of lagging sales analysts...(read more)

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    Created: 9/20/2018 8:25:18 AM
  • Posted To: Pipeline Press

    This Saturday is the autumn equinox – season-wise, we know what is on the way. “Rob, we, like everyone else, are watching the approaching winter, and higher rates, and wondering if there are ways to improve our financial picture without laying people off or cutting LO comp. Heard of anything?” This is going to sound like a paid ad, but it is not. I refer folks to Riivos (ex-Alight). It’s a cloud-based application for mortgage companies, regardless of size, that “integrates with your core systems (G/L, LOS, payroll, etc.) to show where your BPs are going, what actions you can take to improve profitability, and insight into how those decisions ripple through the company and increase P&L.” They specialize in “what if” scenarios. IMHO, and my...(read more)

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    Created: 9/20/2018 6:00:01 AM
  • Posted To: MBS Commentary

    One of the themes we often revisit in times of trouble is the long-term bull market in bonds. This traces back to the 80's and provides a shockingly linear set of lower highs and lower lows in 10yr yields. Most recently, we've seen yields rise back to the upper boundary of the long-term trend. There's still a chance they could hold ground here, but any further weakness means an official breakout. One other reason to hold out hope is that yields are also at the top of a shorter-term uptrend (teal lines). This could offer some technical support of its own, but it should be noted that the current version of that uptrend is much less linear than the one seen from 2002-2007. Incidentally, I think all of this "big picture trend" business is just a cheap trick (one I've often...(read more)

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    Created: 9/20/2018 5:18:10 AM
  • Posted To: MND NewsWire

    The share of loans originated for refinancing rose in August for the first time this year. Ellie Mae's Origination Insight Report shows that closed transactions for refinancing represented 32 percent of the total, up 3 percentage points from July. The 3-point increase was consistent across all loan types. The refinancing share was 45 percent at the first of the year. The distribution of loans across loan types has been unchanged since May. Conventional loans have a 66 percent share, FHA loans 20 percent, and VA loans 10 percent. The average closing time for all loans was 43 days for the second straight month. The time for purchase loans to close, however ticked up 1 day to 45 days while the timeline for refinance loans dropped 3 days to 38. The average FICO score for closed loans dipped one...(read more)

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    Created: 9/20/2018 5:08:41 AM
  • Posted To: MBS Commentary

    The titular question could be taken two ways . Is the selling pressure in bonds over? Is the "low rate environment" that's been in effect since mid-2011 over? The answers, in order are "probably not" and "for now." To be fair to the "low rate environment," that's arguably been over since 10yr yields broke above 2.5% in a serious and sustained way. They've only done that one other time since moving below and that was the 6-7 months following the taper tantrum. I've frequently suggested that mid-2012 was the truest confluence of low rate motivations and that mid-2016's drop in rates was more of a pain trade for everyone betting on higher rates (Brexit was the scapegoat). If you look past the taper tantrum and the brexit rally, we've...(read more)

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    Created: 9/19/2018 1:36:51 PM
  • Posted To: Mortgage Rate Watch

    Mortgage rates are in bad shape . At some point in the past 3 days (depends on the lender), top tier 30yr fixed rate offerings hit their highest level in 5 years, then 7 years. For the first time since 2011, the most prevalent top tier rate is 4.875% (meaning a handful of lenders are at 4.75% or 5.0%). If this trajectory holds, the average lender would be at 5% next week. In order to make the past few days relevant for anyone who reads this, let's focus on the CHANGE between today's average rates and those seen less than a week ago. From Friday the 14th, the average 30yr fixed quote is an eighth of a percentage point higher (.125%). While we've seen moves that big in the past, with only 1 or 2 exceptions, we haven't seen anything like it in 2018. And when we consider that it takes rates to...(read more)

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    Created: 9/19/2018 12:37:00 PM
  • Posted To: MND NewsWire

    Both permits and starts were expected to pick up in August, at least holding on to their slight gains in July. Housing starts did deliver, posting a strong increase, but permits, a leading indicator, were down sharply. The U.S. Census Bureau and Department of Housing and Urban Development report that permits fell by 5.7 percent in August to a seasonally adjusted annual rate of 1,229,000 compared to the July rate of 1,303,000. The July number was a downward revision from the 1,311,000 units originally reported. This knocks the rate of permitting below the August 2017 level of 1,300,000 units by 5.5 percent. Analysts polled by Econoday were looking for permitting to come in at a consensus rate of 1,315,000 units with a range of 1,260,000 to 1,323,000. Permits for single family houses were reported...(read more)

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    Created: 9/19/2018 7:04:04 AM
  • Posted To: Pipeline Press

    I received this question from a well-known lender in Texas. “Rob, our company views loan processors as the unsung heroes of lending. We’re evaluating how ours are paid. Any thoughts?” The STRATMOR Group does quite an industry survey, and its recent data shows that the overwhelming majority are paid some incentive, and that their base salary is about ¾ of their total comp. The incentives are either a per loan payout, the achievement of certain objectives, or miscellaneous company-specific items. Capital Markets Yes, rates have moved up. Is that a surprise to anyone? Shouldn’t be. Are you hoping tariffs hurt our economy and push rates back down? Don’t hold your breath. So, what should we know about why rates are doing what they’re doing? Any reason for...(read more)

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    Created: 9/19/2018 6:05:42 AM
  • Posted To: MND NewsWire

    Labor Day typically marks the end of summer and the resumption of business as usual. Hopefully it also marked the beginning of a turnaround for mortgage applications, which increased across the board for the first time since mid-June. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage application volume, was up 1.6 percent on a seasonally adjusted basis during the week ended September 14. On an unadjusted basis the volume increased 12 percent from the previous week which was shortened by the Labor Day holiday. The seasonally adjusted Purchase Index eked out an 0.3 percent gain , the third week in a row it has increased. On an unadjusted basis the index was up 9 percent week-over-week and was 4 percent higher than the same week in 2017. Even refinancing...(read more)

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    Created: 9/19/2018 5:10:07 AM
  • Posted To: MBS Commentary

    Remember early 2018 when the fear was compounded by this list of bad actors? increased Treasury issuance to pay for the revenue shortfall in the new tax bill the upside economic/inflation potential created by the new tax bill A Federal Reserve that was increasingly intent on hiking rates and increasingly willing to decrease the size of its balance sheet (aka, bond buying) Foreign central banks that were tiptoeing ever close to their own "taper tantrum" moments It was enough to send 10yr yields quickly over 3% by May 2018. Then the Italian political drama reminded markets that things could still go wrong. Tariff uncertainty added to that sentiment and bonds sneaked through the summertime months without much of a fuss. Enter September. We knew September could bring a sea-change to the...(read more)

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    Created: 9/18/2018 1:17:32 PM
  • Posted To: Mortgage Rate Watch

    Mortgage rates edged up to 4-year highs with yesterday's bond market losses and things went from bad to worse today. Bond markets (which underlie and directly affect rates) are under extreme pressure today and have generally had a very bad September. Weakness in bonds equates to higher rates. So why are bonds weak? In part, this is weakness that was expected way back at the beginning of the year as the tax bill came to fruition and as economic data continued to suggest ongoing expansion. Given that the inflation/growth outlook was a whole lot worse in 2013 and early 2014 when 10yr Treasury yields briefly crested 3.0%, it stood to reason that those same yields would almost certainly need to move well over 3.0% this time around (inflation/growth are key factors in Treasury yields and rates in...(read more)

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    Created: 9/18/2018 12:35:00 PM
  • Posted To: MND NewsWire

    Builder confidence in the market for newly-built single-family homes stabilized a bit in September. The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), which has been wobbly in recent months, retained its August reading of 67 in September. The two months are tied at the lowest level of the index so far this year. "Despite rising affordability concerns, builders continue to report firm demand for housing, especially as millennials and other newcomers enter the market ," said NAHB Chairman Randy Noel. "The recent decline in lumber prices from record-high levels earlier this summer is also welcome relief, although builders still need to manage construction costs to keep homes competitively priced." Derived from a monthly survey that NAHB has been conducting...(read more)

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    Created: 9/18/2018 7:29:14 AM
  • Posted To: MBS Commentary

    Not to be confused with the Red Sea, which is an actual place, the sea of red in the title is merely a reference to general bias toward weakness in bond markets for however long you care to look back in time (provided you don't look back more than 2 years). Most pressing is the time frame between now and the end of August which has seen 10yr yields rise nearly 20bps. That makes the past 3 weeks the worst selling spree since April, and introduces yet another attempt to break free from the gravitational pull of 10yr yields at 3%. Bond bulls hope to see gravity kick in at the teal line in the following chart. The manner in which it's been approached suggests we shouldn't take such support for granted, but neither can the technical significance of the 3% zone (3.015% specifically, over...(read more)

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    Created: 9/18/2018 6:14:24 AM
  • Posted To: Pipeline Press

    TRID 2.0: mandatory compliance on 10/1 is only a few weeks away. Temenos has a primer on it , as does Qualia . The MBA had a piece on it . The NY MBA has a webinar next week. In Michigan the MMLA has a seminar on it this week. Hopefully everyone’s up to speed already. Lender Products and Services Stearns Wholesale helps brokers grow and brand their business with social media. Marketing Tools for SNAP 2.0 now offers Social Media Graphics for our most popular products and services. This marketing portal allows you to create personalized marketing pieces to help you extend your reach, grow your customer base and brand your business. Customizable flyer and social media templates can be personalized for both business-to-business and consumer relationships. It’s Easy! We provide the flyers...(read more)

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    Created: 9/18/2018 5:41:54 AM
  • Posted To: MBS Commentary

    10yr yields briefly hit their highest levels since May 23rd this morning after one large trade started a snowball sell-off in Treasuries. Before that, modest weakness was already intact. "A snowball sell-off to 4-month highs" sounds a bit more dramatic than the actual scope of weakness. At the worst moments of the day, we were still looking at less than 3bps of losses in 10yr yields. It didn't take long for buyers to take advantage of the yields, even though traders were contending with another big day of corporate bond issuance . Making the rally slightly less impressive was the fact that stocks were selling at the same time, potentially adding a risk-off component to the move. Ultimately, 10yr yields weren't willing to dip back below the 2.99% technical level and Fannie...(read more)

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    Created: 9/17/2018 2:06:55 PM
  • Posted To: Mortgage Rate Watch

    Mortgage rates may have had a fairly bad day last Friday, but today was worse . Today officially saw the average lender back at rates not seen since May 17th, 2018. That date might not seem too far away, but at the time, it marked the highest rates since late April of 2011. In other words, today's rates matched 7-year highs. If there's a saving grace , it's the fact that underlying bond markets were able to improve throughout the day without most mortgage lenders adjusting rate sheets accordingly. In other words, if bonds are in the same territory by tomorrow morning, the average lender would be offering slightly lower rates. The other potential saving grace is that rates have had a bad enough moving streak that they're increasingly likely to catch a break simply due to the normal cadence of...(read more)

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    Created: 9/17/2018 1:39:00 PM
  • Posted To: MND NewsWire

    The robust growth in the economy in the second quarter may be the final peak of this expansion according to Fannie Mae's Economic Development Report for September. Initial data indicates the 4.2 percent growth last quarter appears to be moderating to the estimated third quarter gain of 3.2 percent predicted in the August report. All factors considered, including inventory restocking and increased government spending leads Fannie's Economic and Strategic Research Group (ESR) to expect full-year 2018 growth of 3.0 percent before a slowdown to 2.3 percent in 2019 as the fiscal stimulus runs its course. ESR expects consumer spending and business fixed investment growth to moderate but remain at a solid pace but expect that trade will drag on growth. Second quarter growth had benefitted in part...(read more)

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    Created: 9/17/2018 12:11:14 PM
  • Posted To: MND NewsWire

    There were quite a few recent milestones, high and low, noted in the Quarter 2 Residential Property Loan Origination Report from ATTOM Data Solutions. The report covers the 2.09 million 1 to 4 unit residential loans originated during the quarter, an increase of 15 percent from the first quarter but only 1 percent more than a year earlier. One striking finding was the increase in the size of downpayments during the quarter - a median of $19,900, a record high in data going back to the first quarter of 2000. This is a 19 percent increase from $16,750 in the previous quarter and 18 percent from $16,925 in the same quarter last year. At a percentage, that represents 7.6 percent of the median sales price of the homes purchased with a mortgage during the quarter, compared to 6.6 percent in both of...(read more)

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    Created: 9/17/2018 8:00:50 AM