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MBS RECAP: Bonds Cap Extraordinarily Tame Week Despite Excuses

 

Posted To: MBS Commentary

We've seen a whole lot more movement in the bond market for a whole lot less motivation than we had this week. Back to back econ data shockers (Philly Fed and Housing Starts) were scarcely able to get yields back up to Monday morning's highs, and yields hadn't fallen very much to begin with. In other words: "Housing Starts Surge 40% Annually to The Highest in 13 Years" isn't really a headline that jives with 10yr yields rising less than 2bps by the close of business. Oh, and stocks hit all time highs on 4 out of the 5 days. Oh, and the phase 1 trade deal signing went off without a hitch. All that to say that bonds were more than entitled to end up somewhere other than smack dab in the middle of the consolidation range that's been in effect for close to half a year...(read more)

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Mortgage Rates Off Recent Lows

 

Posted To: Mortgage Rate Watch

Mortgage rates moved slightly higher over the past two days as strong economic data and corporate earnings coaxed investors into riskier assets like stocks. Bonds (which dictate interest rates) are always being bought and sold, but demand varies depending on investors' risk appetite. If demand for bonds falls as it has in the 2nd half of this week, rates move higher. Fortunately, this move has been very small in the bigger picture. Mortgage rates, specifically, have moved even less than rates associated with other bonds. The average lender is still able to offer 30yr fixed rates of well under 4% on top tier scenarios. And the average borrower wouldn't see more than 0.00125% of difference from the lowest rates in more than 3 months. Bottom line, while rates are slightly higher than their best...(read more)

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Markets Wrapping Things Up Ahead of Long Weekend

 

Posted To: MBS Commentary

Sometimes the market moves in clear response to a headline event or the scheduled release of an economic report. We have clear examples of this recently. last week's Iran-related escalation (and de-escalation) had massive and immediate impacts that lined up perfectly with key events in the news. This week's most noticeable move followed perfectly on the heels of yesterday's big beat in the Philly Fed Index (an economic report that frequently moves markets when it's much better or worse than expected). Now today, we're seeing a similar level of movement but without any over cause and effect with respect to news or data. That said, there is still something to connect it to! Simply put, markets moved when a certain portion of the trading community began its day and when a certain...(read more)

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December's Housing Starts Surged to 13-Year High

 

Posted To: MND NewsWire

While permits fell from the previous month, the U.S. Census Bureau and the Department of Housing and Urban Development said December was another exceptional month for residential housing starts. Those starts soared to a seasonally adjusted annual rate of 1,608,000 during the month, a 16.9 percent increase from November's estimate which was revised from 1,365,000 to 1,375,000. The December number was the highest monthly rate for starts since the same month in 2006 and was 40.8 percent higher than last year's December pace. Both single-family and multifamily construction were strong. Single-family starts rose 11.2 percent to an annual rate of 1,055,000 from the revised (from 938,000) rate of 949,000 in November. Single-family starts were 29.6 percent ahead of last December's rate of 814,000....(read more)

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Renovation Products; CEOs Can't Ignore LIBOR Transition; Cap. Markets

 

Posted To: Pipeline Press

I’ve gotta hand it to those writers who put out listings for real estate agents. Maybe if I had a bunch of money I could live in a “secluded retreat” or an “enchanted villa.” I have never lived in a place described as a “retreat,” having stunning or remarkable views or panoramic vistas in a “gorgeous natural setting.” No luxury living, nor a delightful “chalet.” No soaring ceilings in the spacious great room or mudroom, filled with “warm ambiance.” Prestigious enclave? Nope. Has a house ever brought me conveniences and lifestyle? No. I’ve never lived in a house with casual banquette dining, nor in a “one-of-a-kind cottage.” Sure those are the terms real estate agents use to sell houses. They are...(read more)

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Home Builders Confidence Remains Near 20-Year High

 

Posted To: MND NewsWire

The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) settled back a bit after its 5-point surge in December took it to its highest level since 1999. The Index, a measure of builder confidence in the market for newly constructed homes, dipped 1 point in January to 75, still remaining above that earlier high. NAHB said, "With the Federal Reserve on pause and attractive mortgage rates, the steady rise in single-family construction that began last spring will continue into 2020. However, builders continue to grapple with a shortage of lots and labor while buyers are frustrated by a lack of inventory, particularly among starter homes." The HMI is derived from a monthly survey that NAHB has been conducting for more than 30 years. The association's new home builder...(read more)

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MBS Day Ahead: Robust Day of Econ Data and Corporate Earnings

 

Posted To: MBS Commentary

Bonds continue to be well-contained by the prevailing consolidation range--a series of higher lows and static highs that's been in place in its current form since mid October. A big break outside that range could serve as a cue for sustained momentum in the direction of the break. Think of such patterns as the bond market's way to pause and reflect before choosing the direction of new momentum. As for the underlying data and events that could spark such a breakout, this morning's econ data is the most robust of the week with Philly Fed, Jobless Claims, Import Prices, Builder Confidence and the headliner: Retail Sales. But even this line-up isn't up to the task of generating enough bond movement to break the range (update: the data just came out and indeed, bonds are little-changed...(read more)

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HUD Jobs; Borrower Satisfaction Report; Vendor News and Updates

 

Posted To: Pipeline Press

For folks who like numbers and trends, according to the U.S. Census Bureau’s national and state population estimates released in December, 42 states and the District of Columbia had fewer births in 2019 than 2018. Natural increase, or when the number of births is greater than the number of deaths, dropped below 1 million in 2019 for the first time in decades. The nation’s population was 328,239,523 in 2019, growing by 0.5 percent between 2018 and 2019, or 1,552,022 people, which is reflective of a multiyear slowdown since 2014. New York state lost the most population, while California had the largest net domestic migration loss, though still remains the most populous state (39,512,223 people). Nationally, net international migration continues to decrease, falling to below 600k between...(read more)

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MBS RECAP: Most Interesting Part of Today is That it Comes Just Before Tomorrow

 

Posted To: MBS Commentary

Today marked a rare mid-week "total dud" in terms of bond market momentum developments. This was made all the more striking by the fact that bonds certainly COULD have developed some sort of reaction strategy based on the particulars of the US/China trade deal signing (it included several new clarifications on the deal). But I'd be the first to admit that trying to connect the dots between those boring trade-related details and actionable decisions in the bond market sounds about as tedious (or even impossible) as any trading motivation I can imagine. So bonds punted, yet again, and in so doing, carved out their narrowest trading range in more than a week. Treasuries gained modestly ahead of the 3pm CME close, but inconsequentially so. As discussed in the attached video, yields...(read more)

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Mortgage Rate Volatility Still a No-Show For 2020

 

Posted To: Mortgage Rate Watch

Mortgage rates improved modestly today, adding to yesterday's slightly less compelling improvement. Taken together, they keep an air of calm and steady progress intact during a week that ran the risk of stumbling across volatility. One of the key sources of potential volatility was today's signing of the US/China "phase 1" trade deal. Granted, it was only much of a risk in the event that something unexpected happened. Needless to say, nothing unexpected happened! Mortgage rates and the underlying bond market reacted accordingly as they merely went about their business for reasons known only to the traders pushing the buttons behind the scenes (i.e. market movement was so well contained today that we're not able to connect any underlying events with the movement). All of the above having been...(read more)

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Lower Housing Affordability Linked to Slower Job Growth

 

Posted To: MND NewsWire

The National Association of Realtors® (NAR) has uncovered another downside to the increasing lack of housing affordability in the U.S. A new study found that, in many areas where affordability has declined over the last five years, so has the rate of job growth. NAR measures affordability by calculating the ratio of the median family income to the metro area's qualifying income for a home mortgage or QI. QI is the income needed so that the 30-year fixed mortgage payment on a median-priced single-family home purchased with a 20% down payment accounts for no more than 25% of income. NAR looked at the top 174 metro areas and ranked them by this measure of affordability. It them analyzed the shift in each area's affordability ranking and the pace of non-farm payroll job growth (generally known...(read more)

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VA Removes Loans Limits, Increases Fees

 

Posted To: MND NewsWire

U.S. military veterans and active duty personnel who buy or refinance a home in 2020 will have more buying power if they use a VA loan. They will also pay more money for that loan. The Blue Water Navy Vietnam Veterans Act of 2019, which become effective on January 1, 2020, will eliminate loan limits on VA loans but will also increase many of the associated fees. VA loans are available with a loan-to-value ratio of 100 percent and in some circumstances the leverage can be even higher. The loans however have always been subject to the same limit that applies to conventional and FHA loans. That limit is $510,400 in most U.S. counties this year, with larger limits in defined "high cost" areas. These limits will no longer exist for veterans with full access to the benefit. The removal of loan limits...(read more)

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MBS Day Ahead: Dear Bond Market, I Challenge You To Do Something Interesting

 

Posted To: MBS Commentary

Bonds have been able to put in a few days with moderate movement both higher and lower in yield, but have generally been holding inside a range that is even narrower than the one seen during December. December's range, in turn, was narrower than November's, and so on and so on, all the way back to August 2019. Narrowness is one thing, but it's currently being compounded by a lack movement. In other words, while November was narrower than October in terms of the distance between highs and lows, it at least occurred at slightly different trading levels. Dec and Jan, on the other hand, have each occurred INSIDE November's range. This isn't a very common occurrence for the bond market, and when it happens, it's only a matter of time before more interesting movement starts...(read more)

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Retention, Fraud Prevention Tools; Events and Training Coast to Coast; Capital Markets

 

Posted To: Pipeline Press

We find ourselves at Wednesday already. How about some numbers for Hump Day? Years ago Arnold Schwarzenegger famously said, “Having more money doesn't make you happier. I have $50 million dollars, but I'm just as happy as when I had $48 million.” JPMorgan Chase's profit surged 21% in the fourth quarter, reaching $8.52 billion, while Wells Fargo reported a 53 percent year over year drop after setting aside $1.5 billion for litigation fees. The US budget deficit reached $1.02 trillion in 2019, according to the Treasury Department. This marks the first time the deficit has topped $1 trillion since 2012. And Atlas Van Lines tells us that California is simultaneously #1 in both people moving into the state and moving out of the state! (Texans can chant, “We’re #2! We’re...(read more)

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Mortgage Applications Soar to Best Levels in Over a Decade

 

Posted To: MND NewsWire

Mortgage application activity exploded out of the starting gate during the first full week of 2020 . The Mortgage Bankers Association's (MBA) said its Weekly Mortgage Applications Survey for the week ending January 10, 2020 showed increases in every category, dramatic ones in most, as rates set new recent lows. The Market Composite Index, a measure of mortgage loan application volume, increased 30.2 percent on a seasonally adjusted basis from the week ended January 3, a period that was still in holiday mode. The previous week's results included an adjustment for the New Year's Day holiday. On an unadjusted basis, the Index was up by 67 percent compared with the previous week. The Refinance Index gained 43 percent from the previous week and was 109 percent higher than the same week one year...(read more)

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