It was a fairly boring day on what has turned out to be a fairly boring week so far for mortgage rates.  After Friday’s larger spike, we’ve seen a microscopic recovery on each of the past 2 days. In terms of specific index levels, this equates to a 0.04% drop in the top tier 30yr fixed rate for the average lender.  This is roughly one third of the minimum increment that separates typical mortgage rate offerings.  In other words, it isn’t a huge move by any means.  Tomorrow brings the release of the Consumer Price Index (CPI)–an economic report that has occasionally resulted in huge changes in mortgage rates. As a key measurement of inflation, CPI has been critically important at times when the market sought clarity on potential shifts in the inflation narrative. At present, however, the market is waiting a number of months before drawing any firm conclusions on inflation due to tariffs and trade deals that have yet to be finalized.  Even then, it will take a few months for those policy changes to flow through to the data. None of the above means that CPI is a complete dud.  The market can certainly still react, but the bar for true drama is higher than normal.  In other words, CPI would need to come in much higher or lower than forecast to have a big impact on rates.

“Why is Ireland so expensive? House prices are always Dublin’.” Those days are temporarily over in the United States, and the pendulum is quickly swinging to more inventory and price cuts in many places and price points. (If you’re wondering where your client can pick up an average home for cheap: Most Affordable U.S. Cities to Buy a Home for $300k or less.) Of all the major metro markets, Phoenix boasted the greatest number of listings with price cuts, at 31.3%, up more than 7 percentage points from the same period last year amid rising inventory. (The typical home in Phoenix costs $525,000, representing a drop of more than 3% from May 2024.) Here in Tampa, citizens saw the second-biggest share of discounted listings, at just below 30%. The median list price in the Sunshine State market stood at $417,500, having shed 1.6% compared with the same time last year. Coming in at No. 3, Denver had 29.4% of local home sellers slash prices on their properties last month. (Today’s podcast can be found here and this week’s are presented by Flyhomes, the leading wholesale lender for Buy Before You Sell solutions. Whether your borrowers run into DTI issues, need to unlock home equity for down payment, make a stronger, cash-like offer, or even move potentially with no cash out of pocket, Flyhomes provides a full suite of financial products to help them move forward, before selling their current home. Hear an interview with LoanLogics’ Roby Robertson on the proliferation of the non-QM mortgage market, examining its key growth drivers, borrower trends, technological advancements, and how lenders are navigating risk and compliance amid shifting economic conditions.)

Although bonds are experiencing a small amount of volatility this morning, it isn’t consequential in the bigger picture.  Quick-but-modest weakness at 10:15am ET has essentially taken MBS back to unchanged levels.  10yr yields rose 2bps and are still almost 1bp lower. In the absence of relevant econ data, it falls to the Treasury auction and trade-related headlines to inform any bigger-picture momentum. As always, there’s a slightly better than random possibility of bond market weakness in the hours leading up to a Treasury auction.

Covius’ title services had focused on the needs of firms involved with defaults, but this acquisition from Blend pushes the shift to originations forward.

A forthcoming bill from Sens. Jim Banks, R-Ind., and Catherine Cortez Masto, D-Nev., would allow the Federal Housing Finance Agency director to set limits on executive pay at the Federal Home Loan banks.

A consent order issued by Washington against mortgage brokerage Xpert Home Lending accused the firm of violating the state’s consumer protection law.

A new executive order reverses digital ID initiatives, fraud alerts and federal data-sharing plans from which banks stood to benefit.

While Fannie Mae sees improving buying and selling conditions, more consumers still think prices will rise over the coming year.

Gentle Rally Gently Reverses After Trade Headlines

First thing’s first: bonds closed in stronger territory and retained most of the gains that were present in the AM hours.  But they would have done just a bit better if not for a handful of newswires that hit around 2:30pm ET regarding vaguely positive comments on US/China trade talks (i.e. BESSENT ON US-CHINA TALKS: ‘GOOD MEETING’). This preceded a move up to 4.487 from 4.470 in 10yr yields–barely worth mentioning in the bigger picture, and only mentioned here to reinforce the market’s willingness to react to trade-related headlines and because US/China talks will be continuing on Tuesday.

Market Movement Recap

09:53 AM Sideways overnight and inching into positive territory after 9:30am NYSE open.  MBS up 3 ticks (.09) and 10yr down 1.3bps

As hoped, Friday’s big rate spike did not carry additional momentum into the new week.  This is occasionally a risk when rates are responding to big surprise in the jobs report, but slightly less of a risk when the other economic data had been weaker.  All that having been said, it’s not as if we’re seeing a triumphant return to last week’s lowest levels.  Rather, it’s more of a solid show of support at Friday’s higher levels with a very modest bounce.  In terms of our 30yr fixed rate index, the improvement is 0.02%.  There were no significant economic reports or news headlines to inspire volatility, although afternoon headlines regarding progress on trade talks with China may have resulted in bonds losing some ground. All else equal, when bonds lose enough ground, mortgage rates move higher, but today’s afternoon losses were too small to trigger a reaction among mortgage lenders.