My cat Myrtle never liked Halloween, apparently believing it was for amateurs. Our nation has plenty of interesting historical sites related to ghosts and unpleasant things… like Salem, Massachusetts. It lives with the history of the Witch Trials of 1692 during which 19 women and men were executed on charges of witchcraft. Today, the most frightening thing about the place is the traffic in October, but also somewhat frightening is the price of real estate: if you want a decent place there, it’s going to set you back a mil. Speaking of home prices and U.S. transactions, foreign buyers are alive and well, apparently undeterred by the high prices and with a good percentage of them doing all-cash deals. At least affordability problems have been easing somewhat, with the gradual decline of mortgage rates this year. We all know that increasing regulatory restrictions and requirements will not solve consumer affordability challenges, and here is a White Paper that discusses market-based Homeowner Affordability Strategies that benefit many industries and homeowners, the pressing challenge of housing affordability amid the escalating impact of natural disasters, a crisis that demands innovative, collaborative solutions to ensure resilient and sustainable communities. (Today’s podcast can be found here and this week’s are sponsored by Optimal Blue, the only end-to-end capital markets platform built to power performance, precision, and profitability, helping lenders of all sizes operate more efficiently, manage risk more effectively, and maximize results. Today’s has an interview with nCino’s Casey Williams on the latest wave of AI-powered mortgage innovations and how these tools are redefining lender efficiency, borrower experience, and what’s next in intelligent mortgage automation.)

First off, bonds are doing fine this morning.  10yr yields are technically higher on the day, but only when compared to yesterday’s 5pm levels.  As far as most trade desks are concerned, 3pm is the closing time for Treasuries, and against that benchmark, we’re slightly stronger on the morning.  MBS are stronger still, almost certainly because they don’t have to concern themselves with the digestion of $183bln of new issuance over the first 2 days of the week (unlike Treasuries). With that in mind, keep an eye on today’s auction results (typically 1:02pm, despite the 1pm official time). Bonds will either be seeing some post-supply relief, or simply locking into whatever the pre-Fed positioning trade may be.

Bonus chart: Labor Differential (a metric inside the consumer confidence numbers that shows the spread between those who view jobs as being plentiful vs those who say jobs are “hard to get”). It’s hard to see in the chart, but that 9.40 reading is up slightly from last month.  

The GSE accused four companies of trademark infringement, alleging they misrepresented to consumers that their products received its endorsement.

Fannie Mae revised its economic and housing outlook for 2025 and 2026, projecting mortgage rates to hit 6.3% and 5.9%, respectively.

Bill Pulte’s X post has the industry excited that loan level price adjustments could change, but the impact would not be as beneficial as some think, KBW said.

A previous report on Waterstone Mortgage’s Q3 earnings contained inaccurate information. We are correcting the record.

Malloy Evans and Danielle McCoy are moving on as both Williamson and Tom Klein, deputy general counsel, take on their respective responsibilities for now.

Bonds Improve After Treasury Auctions

Treasury auctions don’t always cause a reaction in bonds, but they did today. This has less to do with the results being remarkable and more to do with the fact that there were two big auctions on a Monday (as opposed to the typical auction schedule that plays out Tue-Thu) as well as the fact that there’s not much else going on in terms of data due to the shutdown. In hindsight, we can see the market likely built in a small concession ahead of these auctions, and the concession was traded back out after the auction results printed. One final way we know the auctions are having an impact is via the outperformance of MBS. Since MBS aren’t weighed down by a big glut of new supply, they were free to outperform both 10 and 5yr Treasuries–something like probably would not have happened so decisively in the absence of the auction cycle. 

Econ Data / Events

m/m CORE CPI (Sep)

0.227% vs 0.3% f’cast, 0.3% prev

m/m Headline CPI (Sep)

0.3% vs 0.4% f’cast, 0.4% prev

y/y CORE CPI (Sep)

3.0% vs 3.1% f’cast, 3.1% prev

y/y Headline CPI (Sep)

3.0% vs 3.1% f’cast, 2.9% prev

m/m SUPERCORE

.351 vs .330 prev

Market Movement Recap

10:01 AM Modestly weaker overnight with some additional selling after 9:30am NYSE open. MBS down 2 ticks (.06) and 10yr up 1bp at 4.029

01:19 PM Stronger both before and after 5yr Treasury auction.  MBS up 1 tick (.03) and 10yr down 2bps at 3.999

Mortgage rates fell to the lowest levels in a month last Tuesday and barely budged through the rest of the week. Now, at the start of the new week, the average lender is perfectly unchanged from last Friday. This means there are only a small handful of days with meaningfully lower rates going all the way back to late 2022. As the government shutdown continues, the bond market (which dictates rates) continues missing out on the bulk of relevant economic reports that normally help guide momentum throughout the month.  Depending on the day, however, there can be other sources of inspiration. In today’s case, the bond market took some solace from a well-received auction of US Treasuries. When it comes to auctions, when demand is stronger than expected, it can put some downward pressure on rates. This happened today, and it prompted a small handful of lenders to issue mid-day improvements, but it wasn’t enough to change the average rate.

I was recently on a hike with a gal pal, and we were talking about her future. I asked, “You don’t have any kids. Who is going to take care of you when you get older?” She replied, “The sommelier.” The future should be on everyone’s minds. I met up with a friend last week at the MBA Annual, and, knowing that his son had worked summer jobs for a lender in our business, I asked him about his son entering the residential lending. He replied, “He was all set to become a loan officer assistant but then went to work for ICE due to its $50,000 signing bonus program.” Paying off a student loan should matter to recent college grads, and certainly impacts buying a home down the road. I hear plenty of rumors about student debt. It turns out that, among those who ever incurred debt for their education, 8 percent were behind on their payments at the time of the 2024 survey, and 33 percent had outstanding debt and were current on their payments. Fifty-nine percent had completely paid off their loans. (Today’s podcast can be found here and this week’s are sponsored by Optimal Blue, the only end-to-end capital markets platform built to power performance, precision, and profitability, helping lenders of all sizes operate more efficiently, manage risk more effectively, and maximize results. Today’s has an interview with Rob Chrisman on takeaways from MBA Annual, the mood of the industry, and what to look forward to as conference season winds down.) Services, Products, Software, and Tools for Lenders and Brokers