Products, Services, and Software for Brokers and Lenders There’s a reason $5.99 feels different than $6.00. Behavioral economists call it the “left-digit effect.” When it comes to mortgage rates, borrowers just call it a reason to refinance. Optimal Blue’s January Market Advantage report shows falling rates crossing that psychological threshold – and refinance demand responded fast. Total mortgage lock volume rose 16 percent month over month and 36 percent year over year, driven by a 50 percent month-over-month jump in rate-and-term refinances, now running more than four times higher than last January. The report also points to improving credit quality and affordability, alongside renewed momentum in the secondary market, including rising MSR values, increased securitization activity, and expanding investor participation. Published monthly, Market Advantage delivers direct-source insight lenders can use to make smarter capacity, pricing, and capital markets decisions. Download the complimentary report here. Manual “stare and compare” underwriting has been the industry norm for decades, but it comes with rising operational costs. As volume increases, manual verification drives up headcount, slows turn times and introduces greater risk of human error. Exception-based underwriting offers a more scalable approach by using automation to validate income, credit, assets and data consistency upfront, freeing up underwriters to only focus on true discrepancies. The result is fewer touches, faster decisions and a more resilient underwriting operation. Read the full blog to explore how exception-based workflows can help lenders break free from manual reviews and scale more efficiently.

Last Thursday, we discussed the paradox of a rally in the present moment being driven by future data. More specifically, the three downbeat labor market reports increased the stakes for tomorrow’s jobs report. Depending on trends and trading positions, risks can be asymmetrical. A trader who expected higher rates might have only seen a modest increase in yields if the data was stronger, and a bigger decrease in yields if the data was weaker. The market already rejected a break above 4.30% in the 10yr. Then multiple reports suggested additional buying and additional risk of a weak jobs report. The choice to move back toward a familiar recent range (4.1-4.2) became clear with this morning’s weak retail sales data.  Just be aware that if Wednesday’s jobs report is stronger, yields could pop right back over 4.20.

A housing bill that already passed the Senate cleared the House Monday evening, but included bipartisan community banking provisions that have already raised objections in the upper chamber.

The letter claims the flood insurance premium pricing change has made the product unaffordable, resulting in a large drop off in the number of policies.

The Government Accountability Office was tasked with investigating the Consumer Financial Protection Bureau’s stop-work order, but CFPB officials refused to meet with or provide information to Congress’ investigative arm.

Warsh has voiced support for overhauling the relationship between the two institutions with a new version of an agreement struck in 1951.

State regulators and attorneys general could be picking up the gauntlet on anti-kickback provision enforcement, especially in the mid-Atlantic states.

Early Volatility And a Decent Recovery

Bonds lost ground in the overnight session after Chinese regulators cautioned banks against holding US Treasuries. That move was short-lived and more than fully erased before 9am ET. Part of the bounce back can be attributed to a newswire quoting Hassett saying we should expect slightly lower jobs numbers. Some may view this as telegraphing advanced knowledge of Wednesday’s numbers, but that would be highly unlikely based on the typical protocol (Council of Economic Advisors Chair typically gets advance notice the afternoon before a key economic report).  It was also arguably taken out of context. The rest of the day was uneventful, sideways, and slightly stronger, with bonds ultimately ending at modestly lower yields. MBS were flat.

Econ Data / Events

NY Fed Consumer Inflation Expectations

3.1 vs 3.4 prev

Market Movement Recap

10:15 AM Modestly weaker overnight but mostly erased at 8:20am.  10yr up half a bp at 4.218 and MBS down 2 ticks (.06).

02:27 PM Best levels of the day. MBS up 1 tick (.03) and 10yr down 1.3bps at 4.200

Lenders are always analyzing automation for parts of the manufacturing process, and industry vet and STRATMOR Senior Advisor Sue Woodard has her thoughts about last week’s MBA conference. “The IMB has always been a barometer for where this industry actually is, not where slide decks say it should be. This year, the signal was unmistakable. The mood is more optimistic than it has been in years, attendance is strong, and conversations have shifted from survival to execution. But that optimism is disciplined. Lenders are encouraged, not complacent, and the challenges in front of us are well understood. What stood out most in conversations across the conference floor was not a single technology, product, or policy headline. It was a shared recognition that the industry is at an inflection point. The next phase will be defined less by bold proclamations and more by focused decisions, thoughtful adoption, and follow-through. (Today’s podcast can be found here and this week’s ‘casts are Sponsored by Cenlar. Cenlar supports lenders and investors with scalable, best-in-class loan servicing built for today’s complex market. From compliance to customer experience, Cenlar helps portfolios perform better, borrowers stay supported, and servicers focus on growth. We’re proud to partner with a true industry leader. Hear an interview with Experian’s Joy Mina and Ken Tromer on how to access reliable income, employment, and asset data upfront in the origination process, enabling more precise prequalification decisions while reducing friction and improving the borrower’s early-stage experience.)

The past 2 weeks have seen very little volatility for mortgage rates.  After being near 6% for a week in early January, rates rose abruptly to 6.21% (avg top tier 30yr fixed) on January 20th in response to geopolitical drama. They’ve generally descended since then, but in slow, measured steps.   Today’s result was actually a 0.01% increase in the MND rate index, but that’s not terrible news considering last week ended at 2 week lows. In the bigger picture, apart from the super low week in early January, recent rates have been in line with the lowest levels in years. Last week’s most noticeable move came in response to a trio of employment-related reports on Thursday. That suggests the market will be more than willing to react to any interesting developments in this Wednesday’s big jobs report (a single report that is orders of magnitude more important than last Thursday’s reports combined).