The bond market has been forced to take the victories that are within reach.  As November winds down, the best victory we could have hoped for was the absence of any additional defeat.  This has been a perfectly successful week in that regard.  Yields fell on Monday and haven’t closed any higher since then.  Today’s economic data doesn’t look too eager to change that sideways streak.  At this point, the previously prevailing uptrend in yields has seen enough of a breakout to view the market in a more sideways light.  This doesn’t preclude a resurgence of selling, but it does likely mean that such a resurgence would need to have justification in the data.

Want a house for a dollar? Italy has them… figure out the impact on comps for appraisals! To the best of my knowledge, my cat Myrtle never lived in Italy before she was adopted, or even traveled there. Plenty of people will be traveling places during this “late in the month” Thanksgiving time, and those who use airplanes might be interested in this write up of TSA Pre versus CLEAR. Is CLEAR worth it? I wonder if Shan Hanes thinks it was worth it, embezzling bank funds? The Federal Reserve Board on Thursday announced that it had prohibited Shan Hanes from future participation in the banking industry. Hanes is the former chief executive officer of Heartland Tri-State Bank and used his position to embezzle $47.1 million of bank funds in a cryptocurrency scheme that led to the bank becoming insolvent and failing in July 2023. (Today’s podcast can be found here and this week’s is sponsored by PHH Mortgage. If you are looking for a Correspondent Lending partner or an experienced, award-winning subservicer who can manage your forward and reverse, residential and commercial, and performing and non-performing loans look no further than PHH. Hear an interview with MGIC’s Liz Keuler on this year’s Loan Originators Survey Report, which contains lots of info about LOs’ challenges, goals and activities.) Lender and Broker Software, Services, and Products The Loan Store, a national wholesale lender, has adopted OptiFunder’s Warehouse Management System (WMS) to enhance warehouse decision-making and streamline funding processes. CEO Phil Shoemaker emphasized the focus on competitive loan pricing, stating that OptiFunder’s technology reduces warehouse costs and boosts operational efficiency, maximizing their ability to deliver fast, simple home loans. OptiFunder’s WMS optimizes loan allocations by considering various factors, leading to cost reductions and an average decrease in dwell-time by three days. Michael McFadden, CEO of OptiFunder, highlighted that its system not only lowers lending costs but also allows clients to manage operations effectively through market fluctuations. The WMS integrates with major warehouse banks and key stakeholders. As part of the evaluation process, OptiFunder offers a back-test analysis to compare the impact of its optimized decisions and a prospect’s historical allocation decisions. To learn more about OptiFunder’s WMS for mortgage originators, schedule a demo or connect with the team at MBA Accounting and Finance.

Rejections for mortgage credit outpaced almost every other borrowing category, according to the Federal Reserve Bank of New York.

Consumer Financial Protection Bureau Director Rohit Chopra said the FICO credit-scoring model has drawbacks in price, predictiveness and market competition, and stakeholders should develop a more open-sourced model that uses artificial intelligence.

Smaller players face challenges when it comes to mortgage servicing rights, and larger ones have varying motivations, experts at an industry meeting say.

The 30-year fixed rate mortgage average resumed its climb that started in September, as the benchmark 10-year Treasury price still reflects views on inflation.

Fannie Mae’s latest economic forecast no longer expects mortgage rates to go below 6% next year, and that is affecting its views on loan origination volume.

Another Flat Day, This Time With Data

While it would be an overstatement to say that bonds have fully outgrown the phase of volatility that’s dominated October and early November, it’s not unfair to say that volatility has been subsiding rather markedly–especially if we focus on day over day closing levels.  8 out of the past 8 trading sessions have seen 10yr yields end the day in a 4.40 to 4.46 range–pretty narrow, even for a more boring economic and political backdrop. Today’s neutrality had at least something to do with the mixed messages in the econ data, but bonds are definitely waiting for the heavy hitting report of early December before making bigger bets.

Econ Data / Events

Jobless Claims

213k vs 220k f’cast, 219k prev

Continued Claims

1908k vs 1870k f’cast, 1872k prev

Philly Fed Index

-5.5 vs 8.0 f’cast 10.3 prev

Existing Home Sales

3.96m vs 3.93m f’cast, 3.83m prev

Market Movement Recap

10:24 AM Modestly stronger overnight and holding gains after data.  MBS up 3 ticks (.09) and 10yr down 2.2bps at 4.383

11:04 AM Off best levels now.  MBS up only 1 tick (.03) and 10yr now up 0.4bps at 4.409

03:27 PM MBS down 1 tick (.03) and 10yr up 2.4bps at 4.429

They may not be low.  In fact, they may still be a lot higher than you want, but at least they haven’t been too volatility this week.  For the 7th day in a row, the top tier, conventional 30yr fixed mortgage rate ended the day in the same narrow range between 7.01% and 7.08% for the average lender.  Today’s installment was one of the least eventful, with a modest drop from 7.05 to 7.04.  The relatively light day over day volatility in mortgage rates is a reflection of the same level of volatility in the underlying bond market.  Sure, there have been some fairly big intraday swings at times, but the bigger picture has been much flatter in November compared to October. The lower volatility in the bond market is fairly easy to reconcile with a lack of actionable economic data.  Today’s data COULD have been actionable, but it was mixed in its implications for growth.  If it had been much stronger or weaker than expected, rates could certainly have moved more meaningfully.   As it stands, the bond market and the mortgage rate watcher are both waiting for early December as the next time frame with truly massive risks of volatility.  Please note: this doesn’t mean we can’t see volatility between now and then!  Rather, the early December economic data simply carries the bigger risks of inspiring bigger rate movements.  As always, that requires a “for better or worse” qualifier, because volatility can go both ways.  It just hasn’t gone our way very much since mid September. 

As you may have gleaned from our coverage of new home sales, construction, builder confidence, and mortgage apps recently, there are only so many ways to describe the same phenomenon.  Today’s report on October’s Existing Home Sales from the National Association of Realtors (NAR) is just another player on that same stage.  Like the others, it’s languishing at the lowest levels in a long time and cutting a broadly sideways path. Like the others, we can tie the big drop in 2022 to the big rate spike in 2022.  After the problematic time frame highlighted in the chart below, little has changed for sale or rates in the bigger picture.  This particular data series has one other interesting nuance and it has to do with inventory levels.  Existing home inventory has a very reliable pattern of peaking in the summer and bottoming out around the new year.  2023’s inventory peaked much later in the year and now this year, the peak has yet to show up! What should we make of this?  Are more people listing their homes or are fewer people buying the homes that are listed?  Turning to Redfin’s housing data center (which is not the same data set as the Existing Homes data, but may provide some insight), the suggestion is that the sales slowdown has more to do with the inventory building.  The chart below shows that 2024’s new listing levels closely match 2023’s up to this point in the year. Other highlights from this month’s NAR Existing Sales report: