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Mortgage Rates Treading Water Near Long-Term Highs

 

Posted To: Mortgage Rate Watch

Mortgage rates are having a bleak September, having risen at least an eighth of a percentage point in all cases and by a quarter of a point in many cases. Depending on the lender and scenario, conventional 30yr fixed rates of 5.0% aren't out of the question although 4.875% remains far more prevalent for borrowers with lots of equity/down-payment and top-tier credit. Either way, that's as high as mortgage rates have been since 2011 for most lenders. Most of the recent damage had been done by Wednesday afternoon of last week. Since then, underlying bond markets haven't been moving as much, relatively. This could have everything to do with Wednesday's Fed Announcement where the Federal Reserve will undoubtedly hike its policy rate and release updated economic forecasts. Incidentally, today's rates...(read more)

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Housing Market Struggles to Keep Pace With US Economy

 

Posted To: MND NewsWire

Freddie Mac's Economic and Housing Research Group said on Monday that the U.S. economy and job market are firing on nearly all cylinders , "but the housing market has essentially stalled ." The solid growth of the U.S. economy during the second quarter, an increase of 4.2 percent and exceeding forecasts of 4.1 percent, was the fastest in nearly four years. Solid consumer spending and business investment, the Group says in its September Forecast, should keep the economy on a very strong growth path of 3.0 percent this year, moderating to 2.4 percent next year. However, weaker affordability, homebuilder constraints, and ongoing supply and demand imbalances over the summer resulted in fewer home sales and less home construction compared to earlier in the year. Those sales declined in the second...(read more)

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MBS Day Ahead: Bonds Gearing Up For Unfriendly Fed

 

Posted To: MBS Commentary

It would be a tad dramatic to say that rates are at a crossroads as we head into the end of September, unless there's any additional weakness this week. That's because any additional weakness will bring yields closer to breaking 2018's previous high of 3.128% set on May 18th, 2018. When rates break a long-term high, there's always a risk that the previous ceiling will act as technical line in the sand. The natural fear would be for such a breakout to prompt additional momentum toward even higher rates . That's always a possibility, but it's one of two. The other possibility--in the event of additional weakness this week, of course--is that yields would simply be stretching the boundaries of existing ranges or perhaps just extending an upwardly-sloped trend. In he case...(read more)

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Broker and DTC Products; Conventional Conforming News, Wells' LTV Change; USAA layoffs

 

Posted To: Pipeline Press

We’re now officially in autumn, one week left in the 3rd quarter. Most states in the U.S. don’t change their clocks until November 4th, but in Europe they are doing in 2019 what many in this country wish the government would do: We’re now officially in autumn, one week left in the 3 rd quarter. Most states in the U.S. don’t change their clocks until November 4 th , but in Europe they are doing in 2019 what many in this country wish the government would do: end changing clocks at all . Why can’t the U.S. be so sensible? Speaking of “sensible,” do the summer interns of Goldman Sachs represent that entire age group, or are they different? (“Everyone’s above average on our team!”) Here’s an easy to read survey showing their values...(read more)

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Weather Sets Up Push-Pull with Delinquency Rate

 

Posted To: MND NewsWire

Are weather patterns beginning to provoke annual swings in mortgage delinquencies? Black Knight suggests, in its first look at August 2018 mortgage performance data, that could be the case in 2017-2018. The incidence of mortgage distress was heading to millennium low levels last year before the one-two punch of Hurricanes Harvey and Irma. The first struck the Gulf Coast of Texas in the Houston region. A few weeks later Irma, although less destructive than anticipated, created havoc on both coasts of Florida and delinquency rates shot skyward in both states. A year later those hurricane related delinquencies have retreated; Black Knight reports that fewer than 25,000 remain on the mainland U.S. (most indicators of distress do not include the effects of Hurricane Maria on Puerto Rico and the...(read more)

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MBS RECAP: Might as Well Hit This Weekend With Some Hope

 

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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Best Day of a Rotten Week For Mortgage Rates

 

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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Many Enlist, but Flood Coverage Still Falls Short

 

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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MBS Day Ahead: Pain and Belief Radiating Across The Rate Spectrum

 

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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Investor Products; Mortgage Fraud Paper; Wells, PUF, BMO Harris Personnel Changes

 

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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MBS RECAP: Not a Win, But At Least It's Not a Loss

 

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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Mortgage Rates Trying to Stop The Bleeding

 

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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Existing Home Sales Level Out After Long Decline

 

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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Vendor Mgt. and POS Products; Upcoming Events; Ask a Lender's Sunset?

 

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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MBS Day Ahead: Long-Term Trend is a Cheap Trick. Here's The Reality For Rates

 

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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