U.S. District Judge Amy Berman Jackson agreed to temporarily block the Trump administration from firing more CPFB employees and said the White House could not delete or destroy any of the bureau’s data or databases.

At the same time builders and lenders report contracting credit on offer, sentiment in the residential construction industry improved in the latter half of 2024.

The Community Home Lenders of America wants streamlined regulations for smaller independent mortgage bankers from the Bureau, including on compensation.

In this week’s update on mortgage applications from the Mortgage Bankers Association (MBA), purchases continued a modest retreat but refinance demand improved for the 2nd week in a row. This was just barely enough for the Refi index to hit the highest levels since October 2024. The uptick makes sense in light of the mortgage rate situation last week.  Rates had been inching slowly to the lowest levels in almost 2 months as of Monday morning. Wednesday brought a a noticeable drop and there wasn’t much of a bounce for the rest of the week. As has been and continues to be the case, all of the volatility seen in the past year represents only a fraction of the longer-term range. Here’s the same refi index over a longer time frame. The purchase side of the market is typically never as responsive to rates in the short term, and last week was no exception. MBA’s purchase app index moved down for the 3rd week in a row, although it’s still closer to the top of the recent range. In the bigger picture, purchase applications suffer from the same jarring adjustment experienced across the housing market with the epic rate spike in 2022. Here’s a breakdown of this week versus last week in several categories of loans in terms of market share:
Refinances

40.2 vs 39.0

FHA Loans

16.0 vs 16.2

VA Loans

14.6 vs 13.3

Survey respondents had 30yr fixed rates at 6.95 with 0.64 points, down slightly from 6.97 in the previous week.  Jumbo loans were down to 6.96 from 7.01 and ARM rates moved up to 6.20 from 6.07.

The final two days of the present week weren’t on many bingo cards as of Wednesday afternoon.  At the time, rates were jumping higher in response to inflation data.  That same morning, the Consumer Price Index (CPI) showed consumer inflation accelerating much faster than expected last month.  As we discussed yesterday, the Producer Price Index (PPI) helped rates completely reverse Wednesday’s jump because of its implications for lower PCE inflation (different than CPI/PPI, and also the Fed’s favorite) in 2 weeks. Now today, we have a more straightforward example of economic data helping rates with Retail Sales coming in MUCH lower than expected. All else equal, weaker data = lower rates and that was plain to see in this morning’s market movement.  The net effect is a move to the lowest 30yr fixed rate index in nearly 2 months. Bond markets (and thus mortgage lenders’ ability to publish new rates) will be closed on Monday for the holiday. 

Paradoxical Rally Gets Logical After Retail Sales

If yesterday’s PPI-driven rally was a paradox, today’s continuation was quite the opposite.  While it’s not the most reliable market mover among economic reports, Retail Sales can occasionally go big. Today was such an example. Including or excluding the auto sector, sales dropped at the fastest pace in just over year and missed forecasts by the widest margin in several years. That provided a clear mandate for bond traders to press the happy button, ultimately ushering yields to the lowest levels of the week.

Econ Data / Events

Retail Sales

-0.4 vs 0.3 f’cast, 0.4 prev

Retail Sales excluding autos

-0.4 vs 0.3 f’cast, 0.7 prev

Import Prices

0.3 vs 0.4 f’cast, 0.2 prev

Industrial Production

0.5 vs 0.3 f’cast, 1.0 prev

Market Movement Recap

09:15 AM Roughly unchanged overnight and sharply stronger after retail sales data.  MBS up 10 ticks (.31) and 10yr down 6.7bps at 4.465

01:40 PM Still mostly holding morning rally.  MBS still up .31.  10yr down 5.9bps at 4.472

05:10 PM Sideways into the close with MBS only 1 tick (.03) lower than last time.  10yr yields ended down 5.6bps at 4.476

As rumors of the demise of HMDA reporting swirl, as well as a 50 percent reduction in HUD headcount and actual VA cuts, think about this the next time you go into a grocery store: It’s not like lending is like buying organic meat or produce. More than in most retail transactions, the organic consumer is buying both a thing and an assurance about a thing, and stores shouldn’t misrepresent something. The consumer may be ill-prepared to deal with that. I mention this because a certain segment of the population would prefer that the CFPB vanish. (Elon Musk has his own “connection” with the CFPB: it has a database containing hundreds of complaints about his car company, Tesla, and it regulates digital payment platforms, something Musk is developing at X.) Others are quick to say, “Better the devil you know than the devil you don’t” and remind us that plenty of states will step in. For example, in California, thank you to Scott S. who reminds me that misrepresenting occupancy can be a felony! California’s AB 3108 makes it felony mortgage fraud for a “mortgage broker or person who originates a loan” to intentionally “instruct or otherwise deliberately cause a borrower to sign documents reflecting the terms of a business, commercial, or agricultural loan, with knowledge that the borrower intends to use the loan proceeds primarily for personal, family, or household use” or “instruct or otherwise deliberately causes a borrower to sign documents reflecting the terms of a bridge loan, with knowledge that the loan proceeds will be not used to acquire or construct a new dwelling.” (Today’s podcast can be found here and this week’s is sponsored by CoreLogic. Originators who leverage their Marketing Solutions as part of their customer retention practices have seen their pipelines increase by up to 4 times when compared to traditional lead generation methods. Hear an interview with Verisk’s Kingsley Greenland on how the Los Angeles fires and flooding in North Carolina are altering catastrophe models used for insurance pricing.)

What a difference the past two mornings have made for a bond market that was seemingly on the ropes on Wednesday. After yesterday’s paradoxical (though, ultimately rational) rally in response to the PPI data, today’s morning momentum came down to the Retail Sales report. Bonds were flat heading into the data, so it’s not hard to imagine that things could have gone either way. As it happened, the data was exceptionally weak, and bonds have moved to the best levels of the week in response.

A $1 billion assessment announced Tuesday for California’s FAIR Plan, the state-mandated insurer of last resort, is expected to drive up premiums as companies will likely pass some of the costs onto homeowners.

North American banks face heightened anti-money laundering scrutiny and a few related variables will determine whether or not this leads to more mortgage sales.