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MBS RECAP: Not The Central Bank We Were Looking For (But We'll Take It!)

 

Posted To: MBS Commentary

This week's big to-do had been and continues to be tomorrow's Fed announcement, press conference, and updated forecasts. The Fed's European counterpart threw a bit of a curve ball today as Mario Draghi unleashed a barrage of bond-friendly comments overnight with the gist being the essential guarantee of further easing from the ECB. Unsurprisingly, bonds enjoyed Draghi's little surprise . 10yr yields were pulled all the way down to 2.017% at the day's lowest levels. They looked willing to hold in that territory as well. It wasn't until Trump tweeted about promising trade talk developments with China that rates gave up roughly half their gains to end the day perfectly in line with the bottom of the sideways range we've been following (2.06% in terms of 10yr yields...(read more)

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Mortgage Rates Enjoy Surprise Drop Ahead of Fed Day

 

Posted To: Mortgage Rate Watch

Mortgage rates have generally been moving sideways for the past 2 weeks. This has accomplished a twofold goal of coming to terms with the strong gains seen in May as well as preparing for tomorrow's hotly-anticipated announcement from the Fed. It has been and continues to be the case that any major surprises (or even minor surprises) from the Fed could have big, immediate effects on rates for better or worse. But just as the sideways momentum was about to lull us to sleep this week, central bank news from across the Atlantic stepped up to change the field of play today. European Central Bank (ECB) President Mario Draghi delivered a speech this morning in which he laid out the likelihood of additional stimulus measures including rate cuts deeper into negative territory. European bond markets...(read more)

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Construction Numbers Better Than Percentages Indicate

 

Posted To: MND NewsWire

Residential construction figures had been expected to, at a minimum, hold the fort in May after a mixed report in April. While revisions to the April report somewhat skewed the numbers changes to both permits and starts were only fractional. The Census Bureau and the Department of Housing and Urban Development said permits for privately owned housing units were issued at a seasonally adjusted annual rate of 1,294,000 units, an increase of 0.3 percent from April's revised (from 1,296,000) rate of 1,290,000. The May estimate is 0.5 percent below the permitting rate in May of last year, estimated at a rate of 1,301,000 units. Analysts were about on target with their projections. Those polled by Econoday had forecast permits at a rate of 1,290,000 units within a range of 1,270,000 to 1,309,000...(read more)

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MBS Day Ahead: Unexpected Headlines Result in Bond Market "Lead-Off"

 

Posted To: MBS Commentary

In the day just past, bonds did absolutely nothing new or interesting. Yields continued to trade in a narrow, sideways range--one that has persisted for more than 2 weeks. The ostensible catalyst for a breakout was (and still IS, in some ways) tomorrow's Fed announcement (and press conference and economic projections). In the day ahead, we'll ponder what it means that bonds have managed to break out more than a day before the Fed's festivities begin. In fact, today qualifies as confirmed "lead-off" move. These happen frequently enough that we've created a primer on the topic in the MBS Live knowledge base ( here it is ). Long story short, bonds know the big pitch is coming in the form of tomorrow's Fed events, but for whatever reason, they're breaking out of...(read more)

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Digital, Marketing, Training Products; Upcoming Teaching Events

 

Posted To: Pipeline Press

With the backdrop of a global bond market rally today, let’s look back at Randy Newman singing, “It's money that matters, hear what I say. It's money that matters, in the USA.” What does $5.6 million buy you these days? A road-gray Yankees jersey that was worn by Babe Ruth sold for $5.64 million at an auction on Saturday at Yankee Stadium, making it the most expensive piece of sports memorabilia ever sold. Out on the Left Coast, and it’s hard to believe it was 50 years ago, you can pick up the Western Whitehouse for $57.5 million: a 5.45-acre oceanfront estate in San Clemente acquired by former president Richard Nixon in 1969 and would go onto become the setting for several political and social gatherings hosting the likes of Frank Sinatra and John Wayne. (Money and...(read more)

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Gloomier Economic Outlook Brightens Housing Outlook

 

Posted To: MND NewsWire

Freddie Mac's forecast for June sees more dark clouds than usual , but few of those are on the housing front. The company's Economic and Housing Research Group notes that some of those gathering clouds, concerns about global growth and the lingering trade problems, have pushed long-term interest rates to their lowest level since the fall of 2017, 3.82 percent as of the first week of June. That is good news for the industry and consumers. The downturn is not viewed as a flash-in-the-pan and Freddie's economists have revised downward some of their earlier Treasury rate forecasts. The 10-year note yield is expected to decline to 2.4 percent and 2.5 percent in 2019 and 2020, respectively. They also lowered the 1-year Treasury rate forecast to 2.2 percent this year before increasing to 2.3 percent...(read more)

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Mortgage Rates Stay Flat, But Risks Will Increase From Here

 

Posted To: Mortgage Rate Watch

Mortgage rates were only modestly higher today. Most lenders were still quoting the same rates compared to Friday with the only difference being slightly higher upfront costs. This means the rate at the top of the average mortgage quote is still within striking distance of the lowest levels since September 2017. Rather than focus on the journey that has already occurred for rates, it's quickly becoming important to focus on the path ahead . Reason being: rates have generally been flat for more than 2 weeks now. This is incredibly uncommon given the pace of improvements in the several weeks before that. With the Federal Reserve releasing a policy announcement and updated forecasts on Wednesday (both hotly anticipated by financial markets), it seems clear that the sideways momentum in rates is...(read more)

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May Uptick in Builder Confidence Proves Fleeting

 

Posted To: MND NewsWire

The National Association of Home Builders' (NAHB's) measure of builder confidence broke out of its multi-month slump in May, rising 3 points. Much of that gain was reversed this month as the NAHB/Wells Fargo Housing Market Index (HMI) dropped by 2 points to 64, returning to the low- to-mid-60s range it has occupied since the first of the year. "While demand for single-family homes remains sound, builders continue to report rising development and construction costs , with some additional concerns over trade issues," said NAHB Chairman Greg Ugalde. "Despite lower mortgage rates, home prices remain somewhat high relative to incomes, which is particularly challenging for entry-level buyers ," said NAHB Chief Economist Robert Dietz. "And while new home sales picked up in March and April, builders...(read more)

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MBS Day Ahead: Housing Data and The Fed

 

Posted To: MBS Commentary

In the week just past, the bond market began by threatening to bounce toward higher rates after an impressive, 5-week rally to the lowest levels since 2017. The first sign of support appeared without any provocation other than "relatively higher yields." This is a good thing because it indicated traders were looking for an opportunity to step in and buy bonds without any additional motivation. They were looking to reinforce the range as opposed to ride a wave of momentum back to weaker levels. In the week ahead, the bond market will get a more compelling cue regarding a potential range breakout. If there's one event that stands out, it's Wednesday's Fed announcement . This is also one of the meetings that includes updated economic projections (i.e. Fed member rate forecasts...(read more)

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Commercial Products; Flood and Disaster Updates; Capital Markets

 

Posted To: Pipeline Press

I find builder’s naming policies amusing. Let’s call a subdivision “Hidden Valley” or “Lonesome Pines” when it isn’t hidden or lonesome anymore with 500 homes in it. Let’s pave over peach orchards, an area where hawks hunt, or a field of sage brush and then name roads after them. Maybe they can charge more for a house on a street with a cute name. Builders aren’t fools, and they, appraisers, and homeowners also know that houses with garages have more value. Chicago homes with garages sell for an estimated 38% more than comparable homes without them, per a new analysis from Redfin, adding nearly $47k to the sale price of a typical Chicago home. Nationwide, homes with garages sell for $23,211 more than homes without, which equates to a 12...(read more)

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MBS RECAP: Modest Reactions to Econ Data as Bonds Wait For Bigger News

 

Posted To: MBS Commentary

Somehow, the bond market managed to end the week at 2.084% (10yr yield) which is exactly where it ended last week. In all my years of market-watching, I've never seen a sharp weekly (like the one we just had in late May) at the end of a sharp multi-month rally give way to 2 straight weeks of fairly flat trading in bonds. To say that this raises the risk of a very big breakout very soon would be an understatement. Today's data was no help in sussing out the direction of such a breakout. Strongly positive revisions to last month's Retail Sales numbers put only modest pressure on bonds early this morning. A huge drop in consumers' 5yr inflation expectations pushed back in the other direction by about as much at 10am. The rest of the day was spent moving perfectly sideways. When...(read more)

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Mortgage Rates Just Had Another Awesome Week

 

Posted To: Mortgage Rate Watch

While we can't say that this week's best mortgage rate offerings were quite as good as last week's best, they were pretty darn close. In fact, quite a few lenders have simply been quoting the same rates for the entire 2-week period. That happens from time to time, but it never happens after rates make a strong run to the lowest levels in nearly 2 years. Seriously, I can't find any past examples of a similar turn of events. Therefore, it's safe to declare this to be yet another awesome week for rates, even though it's not an awesome week for the average mortgage originator to have much time to sleep, eat, or chill with the fam! Rather than cry for your friendly neighborhood originator, it makes more sense to add to their workload (if you haven't already). With a very important Fed announcement...(read more)

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Calabria and Carson: Housing Leaders Talk Reform, Accomplishments

 

Posted To: MND NewsWire

Attendees at the Ginnie Mae Summit commemorating the agencies 50 th anniversary on Thursday heard from both Dr. Ben Carson, Secretary of the Department of Housing and Urban Development (HUD) and Dr. Mark A. Calabria, newly confirmed director of the Federal Housing Finance Agency (FHFA). Each addressed their plans for updating their respective housing finance components. Calabria spoke first to the increasing role of non-bank mortgage originators. In 2013, he said, non-banks originated 30 percent of the mortgages sold to one of the government guarantee programs. By February of this year, that footprint had doubled to 60 percent. In 2018 those companies originated roughly 50 percent of all mortgages sold to Fannie Mae and Freddie Mac (the GSEs) and they are now Ginnie Mae's main counterparties...(read more)

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Two FHA Premium Changes, An End to MI Requirement?

 

Posted To: MND NewsWire

The House Financial Services Committee (FSC) passed a clutch of bills this week, several of which will assist homebuyers and homeowners. Two directly affect the cost of an FHA loan. The FHA Loan Affordability Act (H.R. 3141), introduced by Dean Phillips (D-MN) would repeal the requirement that borrowers with FHA loans pay premiums on FHA mortgage insurance for the life of their loan. The bill would reinstate the previous policy which allowed borrowers to drop the insurance when the outstanding balance of their loan is reduced to 78 percent of the original value of the home. The wording of the bill appears to specifically disallow consideration of equity accrued through home price appreciation. The bill passed the committee 34 to 25. Another FHA related bill, The Housing Financial Literacy Act...(read more)

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eClose, Non-QM, Broker Products; VA and FHA Investor Shifts

 

Posted To: Pipeline Press

“The City of Baltimore, Maryland suffered a ransomware attack on May 7, 2019. Due to the attack, the City is currently unable to record documents until further notice. In the interim they are issuing ‘Lien Certificates’. Mr. Cooper is offering the following guidance related to loans closed within the city of Baltimore: ‘ Any loans with title reports that contain title exception language regarding lien certificates will be ineligible until further notice.’ If you have any questions, please contact your Regional Sales Team .” Scary stuff. What if this were to happen to an area that is growing by leaps and bounds? For example, two of the top three largest gaining MSAs from 2010 to 2018 were in the state of Texas, with both Dallas-Fort Worth-Arlington and Houston...(read more)

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