Only 5% of homeowners in designated disaster-assistance areas were required to hold flood insurance, according to the Federal Housing Finance Agency’s dashboard.

The regulator said users had trouble finding information like tenant rights and contact information for local government housing offices.

Proceeds from the sale will be used by HomeStreet to pay down Federal Home Loan Bank advances and brokered deposits.

Mortgage rates didn’t move much today, and markets have been very quiet due to the holiday week.  So we’ll take a quick moment for a retrospective. In September 2022, 30yr fixed mortgage rates crested 7% for the first time in more than 2 decades. The following year saw rates move momentarily under 6% and over 8% before returning to 7% by December.  Surely, that broadly sideways performance in 2023 meant that a corner had been turned. Up until the past few months, 2024 indeed looked like a decisively more hopeful year.  To be fair, it was still better than 2023, but ultimately, just as sideways in the end. Will we find ourselves in the same position at the end of 2025? That depends on the state of the economy and inflation.  The latter is of critical importance.  Until and unless inflation sustainably returns to 2% or lower, longer term rates will have a very hard time making significant progress.  Even then, the U.S. will need to avoid and preferably reverse the post-pandemic trend of heavy issuance of Treasuries–something that keeps rates elevated regardless of inflation or the economy. If there’s a saving grace, it’s that this 3 year time frame (2022-2024) now looks a lot like 1980-1982 in terms of the trajectory of rates, and that was the big turning point for the only comparable episode in modern economic history.  

Weaker Afternoon, But Still Uneventful

Bonds began the day in decent shape by pushing back against weakness during European hours.  MBS were briefly in just-barely-positive territory in the first hour.  Things deteriorated very slowly, but very steadily after that.  It took the entire trading session for MBS to give up an eighth of a point.  10yr Treasuries had it worse, with yields moving back up near yesterday morning’s highs.  Chalk that up to ongoing “curve steepening” (fancy talk for 10yr yields rising faster than 2yr yields, and combine that notion with the fact that the average mortgage trades more like a 5yr Treasury these days). Modest volatility aside, volume and liquidity remained “holiday low.”  Next week brings different risks, mainly due to the chance that some big traders will be able to reposition bond portfolios after 2024 is officially over.  These could go either way.  The bigger volatility risk won’t show up until the delayed jobs report on Jan 10th.

Econ Data / Events

Wholesale Inventories

-0.2 vs 0.2 f’cast, 0.2 prev

Market Movement Recap

09:08 AM Slightly weaker overnight, all during European hours.  Holding ground now with 10yr up 1.6bps at 4.594 and MBS down 1 tick (.03).

11:17 AM 10yr up 1.5bps at 4.593.  MBS unchanged. 

02:05 PM hovering near weakest levels.  MBS down 2 ticks (.06) and 10yr up 3.5bps at 4.612

“I’ve just checked my home insurance policy and apparently if my blanket is stolen in the middle of the night, I’m not covered.” For many home owners, taxes and insurance now cost more every month than the mortgage. Is the cost of some imported merchandise from some countries about to go up? Will anyone notice their laptop went up $300 or smartphone $200? Will the dollar’s strength or weakness impact consumers, therefore the economy, therefore lenders? As Dr. Elliot Eisenberg put it, “While Trump speaks of wanting a weak dollar, imposing tariffs will strengthen it. It’s because imposing a tariff makes foreign goods more costly and that means fewer such goods will be imported and thus fewer dollars will be converted into foreign currency. Moreover, tariffs will reduce growth abroad, especially in export-focused nations, which lowers foreign interest rates which causes investors to seek higher rates and thus hold more dollars.” (A tariff primer is below.) (Today’s podcast can be found here and is sponsored by Gallus Insights, the go-to reporting and analytics platform for mortgage lenders and servicers. Gallus makes it easy to access real-time data, create custom reports, and uncover actionable insights, all with a user-friendly design. Simplify your reporting, streamline your decisions, and drive profitability with Gallus Insights. Hear an interview with Spring EQ’s Reno Heine on the home equity lending market) Software, Products, and Services for Lenders

Not that any of this week’s trading activity matters in the bigger picture, but things have been reasonably resilient after Monday’s selling.  Tuesday and Thursday saw more selling, but each day ended with a solid recovery.  Thursday was especially solid with help from the 7yr Treasury auction.  In today’s overnight session, European markets reopened after the X-mas holiday with a moderate spike in yields.  This pulled US yields higher, as is typically the case, but US traders (all 3-4 of them who are in the office today) are pushing back in early US trading. 

Mortgage rates have run higher since the most recent Federal Reserve meeting as consumer spending points to economic strength.

Jason Mitchell, the CEO of The Mitchell Group, called the CFPB’s lawsuit against both his company and Rocket Homes “a witch hunt.”

The lender and servicer is spending $9.3 million on security upgrades in addition to its pending $25 million fund for consumers and their attorneys.