A handful of mortgage stakeholders have expressed skepticism that the trigger lead bill will be passed this year, but are hopeful for 2025.

The Federal Housing Administration reported a 96 basis point increase in its capital ratio for fiscal year 2023, and lenders want more changes to the program.

In its semiannual supervision and regulation report, the Federal Reserve flagged climbing loan delinquencies and a rising number of large bank citations for governance and controls.

Sam Valverde, acting president of Ginnie Mae, has resigned after about six months in the job.

Homeowners in recent years strayed from cash-out refinances and home equity loans despite their greater financing power.

“To the person who stole my glasses. I will find you; I have contacts.” Here in Cleveland, much of the mortgage talk involves conjecture about where we’ll find the Agencies in a few years. If you’d like some “inside baseball” knowledge about what may happen to Freddie Mac and Fannie Mae, you should listen to yesterday’s interview with ex-FHFA Director Mark Calabria. What may happen with conventional conforming interest rates, gfee changes, privatization, the appointment & approval of a new director, net worth changes, capital buffers, the current strength of the Agencies, and so on. The Director of the FHFA, which oversees the conservatorship of Freddie and Fannie, is a position that the president selects and is approved. Interesting, given the spate of cabinet and other posts that are coming out of Mar Largo, U.S. President-elect Donald Trump demanded last Sunday that Republican lawmakers bypass the U.S. Constitution and allow him to appoint key officials without a Senate confirmation vote, aiming to block the little remaining power Democrats have to stymie his administration. Whether this happens, or happens with financial services posts, remains to be seen. Stay tuned! (Today’s podcast can be found here. This week’s is sponsored by Floify. Floify is an easy-to-configure point-of-sale platform that allows each branch or loan officer to customize its look and feel to meet the needs of their lending team, homebuyers, and market. Today’s features an interview with Castor Financial’s Brooks Champagne on how blended income qualifications are getting more borrowers into homes.)

This afternoon’s mortgage rates are higher than yesterday’s latest levels.  That’s a result of bond market weakness seen late yesterday and earlier this morning.  Why would yesterday’s market movement matter?  Simply put, it was too late in the day for many lenders to go to the trouble of adjusting their rate sheets.   Bonds continued to weaken this morning, making it an easy call for mortgage lenders.  The average lender was very close to the highest levels of the past several months seen on November 6th.  Fortunately, bonds managed to improve after that and most lenders were ultimately able to offer positive reprices.  This wasn’t enough to get rates back to yesterday’s levels, but it erased about half of the weakness. 

Uneventful Conclusion to Another Volatile Week

This morning began like many other recent mornings with economic data making a strong, logical case for bonds to move in a certain direction only for bonds to subsequently reverse course and do something else.  In today’s case, it was Retail Sales that pushed yields higher at first.  Perhaps it was also Retail Sales that allowed for a friendly correction as traders digested the report’s internal components (which weren’t as favorable as the headline).  Either way, bonds were able to get all the way back to positive territory by the afternoon.  That’s good in and of itself, but with 10yr yields still over 4.4%, the uptrend is still intact in the bigger picture.

Econ Data / Events

Retail Sales

0.4 vs 0.3 f’cast
last month revised to 0.8 from 0.4

NY Fed Manufacturing

31.2 vs -0.7 f’cast, -11.9 prev

Import Prices

0.3 vs -0.1 f’cast, -0.4 prev

Export Prices

0.8 vs -0.1 f’cast, -0.6 prev

Market Movement Recap

09:17 AM modestly stronger overnight and weaker after data.  MBS down 5 ticks (.16) and 10yr up 3.5bps at 4.474

09:28 AM weakest levels after trying to bounce briefly.  MBS down 6 ticks (.19) and 10yr up 3.9bps at 4.478

01:35 PM Bouncing back to best levels of the day now.  MBS up 1 tick and 10yr down 1.9bps at 4.42

03:40 PM Off the strongest levels, but not swooning in a major way.  MBS down 2 ticks (.06) and 10yr down half a bp at 4.434

All 3 of this morning’s 8:30am economic reports were stronger than expected, and the 9:15am report was right in line with expectations.  Of these, Retail Sales is the headliner, coming in at 0.4 vs 0.3 f’cast.  Additionally, last month was revised up to 0.8 from 0.4.  That’s fairly bad news for the bond market, but it’s mitigated somewhat by the softer internal components (measures that exclude certain volatile components like autos/gas/building materials were below forecast). The bond market seemed to take some solace in those “yeah buts” at first, but yields are back to their highs of the day ahead of the 9:30am NYSE open–a time of day that has generally been volatile for bonds this week.

Mortgage rates have stopped the run of increases following the September Fed meeting but consumers are not likely to notice.