The one-to-one consent rule is set to go into effect Jan. 27, despite some organizations filing emergency petitions asking for a 60-day stay.

If the GSEs are privatized with only their current capital levels, respondents indicated risk premiums on MBS would widen by as much as 45 basis points or more.

The acquisition adds mortgage warehouse lending to Minnesota’s Stearns Bank, the latest to offer the service during a multiyear period that has seen several new entrants and exits.

Half of the underlying support for the token in the investment property sale of a Honolulu condominium will be backed by the borrower’s cryptocurrency.

Paying off debt and making home repairs are the top reasons homeowners choose a cash-out refinance, per the bureau’s report.

Modest Gains Make For an Uneventful Week

If bonds had continued to sell off today, it would have made the week slightly more interesting, but even then, we would still be well under the high yields seen last week.  As it stands, the combination of this morning’s economic data and an undetermined source of inspiration a short while later left bonds in modestly stronger territory, thus making for a very flat week in the bigger picture.  This is neither bad nor good, and also not a huge surprise given the very light data calendar.  There are bigger-ticket events in the week ahead, including a Fed announcement (just tuning in for the press conference), GDP (1st look at Q4), and PCE inflation. 

Econ Data / Events

S&P Services PMI

52.8 vs 56.5 f’cast, 56.8 prev
prices and employment moved higher

Consumer Sentiment

71.1 vs 73.2 f’cast, 74.0 prev
1yr inflation: unchanged
5yr inflation: down 0.1

Market Movement Recap

10:02 AM Modestly stronger at the open, but slightly weaker after data.  MBS down 1 tick (.03) and 10yr up half a bp at 4.647

10:48 AM Bouncing back now.  MBS up 3 ticks (.09) and 10yr down 1.3bps at 4.629

01:51 PM Off the best levels, but still up an eighth in MBS and down 1.3bps in 10yr.

04:26 PM Moving back toward stronger levels into the close.  MBS up 5 ticks (.16) and 10yr down 2.4bps at 4.618

It’s no mystery that 2024 hasn’t been a stellar year for home sales and many other housing metrics. Today’s release of December’s Existing Home Sales from the National Association of Realtors (NAR) confirmed that.   Bad news first: with December in the books, 2024 goes down as the worst year for existing sales since 1995, just barely edging out 2008.3 The good news is that 2024 is over and we ended the year on the upswing in terms of month-to-month and year-over-year momentum. In addition to 3 straight months of improvement and the best sales pace since February, December’s annual pace of 4.24m is 9.3% higher than last December and the largest annual increase since June 2021 (to be clear, the 12 months in 2024 added up to the lowest level of any year since 1995, but this month’s pace was the best since mid 2021 when compared to the same month from the previous year). “Home sales in the final months of the year showed solid recovery despite elevated mortgage rates,” said NAR Chief Economist Lawrence Yun. “Home sales during the winter are typically softer than the spring and summer, but momentum is rising with sales climbing year-over-year for three straight months. Consumers clearly understand the long-term benefits of homeownership. Job and wage gains, along with increased inventory, are positively impacting the market.” full release…

While there were only 4 business days instead of the customary 5, it’s been an intensely boring week for mortgage rates.  Tuesday started out right where Friday left off. From there, Thursday brought the only noticeable change with the average lender moving up to the highest levels in just over a week. Friday saw a return to the boring trend with an almost imperceptible improvement, splitting the difference between yesterday’s highs and Tue/Wed lows.   The day began with rates almost perfectly in line with Thursday’s, but a favorable reception to today’s economic data fueled an improvement in the bond market. This allowed a number of mortgage lenders to make positive adjustments in today’s rate offerings, modest though they may be. Rates (and the underlying bond market) have been relatively starved for actionable economic data this week.  That will begin to change as next week brings a more active calendar.  It continues to the case that rates will have a hard time improving in any major way unless the data shows a clear contraction in growth and continued progress on inflation.

Due to the incredibly light calendar of economic data this week, this morning’s combination of S&P PMI and Consumer Sentiment added up to the most consequential morning of market movers for bonds.  There has indeed been a bit of a reaction, but it’s playing out well within the recent range.
There was 2-way volatility following the PMI data due to stronger internals offsetting a weaker headline.  15 minutes later, calm inflation expectations and modestly lower Consumer Sentiment offered no objections to a modest rally.  Ironically, the highest volume move occurred at 10:50am ET without any clear connection to data or events (not to say there is no connection, but not one that we’ve seen).

With that, the day is essentially over unless something interesting hits the news and grabs the market’s attention (always possible, but never a given).

The Mortgage Bankers Association’s (MBA) weekly mortgage application survey showed a modest decrease in refinance applications and an even more modest increase in purchase applications. At these levels of movement, it’s just as fair to say that applications generally held steady. That’s a good thing for purchases considering last week was already at the highest levels in nearly a year, but again, there’s no real change from the previous week. The more we zoom out, the more sobering the context becomes. The counterpoint is that this context is also optimistic because short of a major meltdown in the housing/mortgage market, there’s really nowhere to go but up. Refinance demand will always be more closely tied to interest rates.  As such, it’s no surprise to see low levels persist as rates remain elevated compared to the lows seen several months ago. On a positive note, present levels are still about 30% higher than the late 2023 lows.  The big picture view of refi apps reminds us of a different time, when each new long-term low in rates meant that most mortgage holders could benefit from a refi.   Other highlights from this week’s data:
Refis accounted for 40.4% of the total, down from 42.7 last time
Adjustable rate mortgages accounted for 5.5% of the total
FHA loan were 16.5% of the total, down from 16.9%
VA loans were 14.6% of the total, down from 15.7%