Two trade groups filed a lawsuit against the Consumer Financial Protection Bureau claiming it exceeded its authority and ignored the legislative history on medical debts.

Some Volatility But Broadly Sideways

Markets seemingly had a lot to get through today between economic data, the Treasury auction, and Fed Minutes.  In addition, there were several headlines from Fed speakers and other policy makers that could have inspired some movement.  Despite all that, and notwithstanding some back-and-forth volatility, bonds traded fairly flat.  Moreover, trading levels remain in line with those seen just after yesterday morning’s sell-off.  Bonds are only open for a half day tomorrow and there are no major economic reports. The next big to-do is Friday morning’s jobs report. 

Econ Data / Events

ADP Employment

122k vs 140k f’cast, 146k prev

Jobless Claims

201k vs 218k f’cast, 211k prev

Market Movement Recap

08:37 AM Moderately weaker overnight and mixed since data came out.  MBS unchanged and 10yr up 3bps at 4.713

12:54 PM MBS down 1 tick (.03) and 10yr up 0.8bps at 4.69 ahead of 30yr bond auction.  

01:03 PM Gaining some ground after well-received 30yr bond auction.  10yr down 1bp at 4.673.  MBS back to unchanged.

03:26 PM Two-way volatility after the last update, but not much change.  MBS down 1 tick (.03) and 10yr down 0.4bps at 4.68

Jobless claims data is normally a Thursday affair, but Federal economic data is not being released tomorrow due to the Jimmy Carter Day of Mourning (markets still open a half day).  As such, we received it this morning along with ADP Employment. Neither report caused any drama for rates, but neither prompted an obvious response. If there’s a market mover so far this morning, it’s a series of relatively friendly comments from Fed’s Waller who downplayed tariff impacts on inflation and, despite acknowledging the uncertainty associated with new fiscal policies, said there are more rate cuts ahead.

I can’t take credit for, “People don’t care about how much you know until they know how much you care.” Empathy and maintaining contacts are oh so important for LOs, brokers, whoever is in contact with a client. Despite mortgage rates being the highest since July, refis now account for 41 percent of applications, and STRATMOR’s current blog is “Refis Help the Economy and the Industry is Ready to Help.” Meanwhile, lenders and vendors are keeping a close eye on Washington DC as well as the 50 state capitals. The MBA’s tools and resources for state associations, state legislative and regulatory committees, the Mortgage Action Alliance and MORPAC, advocacy and lobbying, and MBA state relations committees are all worth knowing about, at least, if you’re in this business. (Today’s podcast can be found here and this week’s is sponsored by CoreLogic. CoreLogic gives mortgage professionals the tools they need to establish long-term relationships with their clients, helping them keep future business in-house and transforming the way they do business. Today’s has an Interview with Onity Group’s Walter Mullen on the subservicing market as it pertains to technology, automation and data, consumer behavior, and what is possible with AI.) Lender and Broker Services, Software, and Products “Are you attending the servicing conference in Dallas next Month? Not much has changed with the traditional solutions offered in the servicing world. MortgageFlex is bringing innovation to loan servicing with a system inspired by decades of experience in the origination space. We have added full default to the industry’s first cloud-native servicing system. MortgageFlex Default is the first of its kind, built inside the full servicing system, and can also operate stand-alone. All other solutions are external products bolted on to support the default process. The application accommodates servicing of Loss Mitigation, Bankruptcy, and Foreclosure solutions. It is delivered with all 50 state foreclosure templates that the servicer can utilize and/or change themselves. Our SQL Database model includes real-time transactions, workflow queues, reporting, and free data access. Make an appointment with John McCrea or stop by booth 420 to see the future of loan servicing.”

For the second day in a row, mortgage rates have moved higher at a modest to moderate pace. Unfortunately, that’s been a trend so far in 2025 and it’s compounded by the fact that rates were already close to their recent highs. The net effect is a move up to the highest levels since June for the average lender’s top tier conventional 30yr fixed rate.  That rate has been over 7% more often than not since October 29th, and exclusively since December 19th.  Are rates “headed to 8 percent?” That’s a figure that gets thrown around quite a bit in social media, etc., but there’s only one average rate today, and it’s 7.17%.  This means the prevailing top tier rate quote is fairly evenly split between 7.125 and 7.25 (because mortgage rates are typically offered in 0.125% increments). There’s no way to know if rates are headed to 8 percent.  If they are, there’s certainly no way to know today.  It would be just as plausible to claim that rates are headed to 6.5%.  Neither is more than a guess, educated or otherwise, and cases could be made for both. As has been and continues to be the case, economic data does the most to guide the path forward for rates.  Specifically, any heroic drop in rates would require downbeat data on the economy and inflation. We didn’t have any of that today, so here we are.

Experian said it has gone “above and beyond the law” to investigate consumer disputes related to the accuracy of information.

James Whitlinger, Freddie Mac single family chief financial officer, has served as the company’s interim CFO since Christian Lown’s departure at the end of June.

“We all get the same 365 days. The only difference is what we do with them.” In 2024 a lot of lenders buckled down every day. Time to take a breather? Maybe not: mortgage bankers still face pressure on profit margins. In today’s Advisory Angle at 11AM PT, powered by the Chrisman Commentary, STRATMOR Senior Partner Garth Graham, Principal Advisor David Hrobon, and Senior Advisor Rob Chrisman discuss managing margin compression, including cost management techniques, improving operational efficiency, and optimizing loan product offerings. In a sense, homeowners have “profit margins” in terms of what makes sense to do ahead of a sale. Pass this along to your real estate agent clients interested in improving curb appeal: A new garage door cost on average $4,513 in 2024, but added $8,751 to the resale value of the home, a 194 percent cost recoupment and one of the best things one can do to juice the sale price. Other clever and cost-effective renovations include replacing an entry door (adds $4,430 to resale value at a cost of $2,355), dabbling in landscape maintenance or lawn care, or refinishing hardwood floors. Some renovations are bad bets: remodeling a kitchen might cost $158,530 but only add $60,176 to resale value, recouping just 38 percent of the cost. (Today’s podcast can be found here and this week’s is sponsored by CoreLogic. CoreLogic gives mortgage professionals the tools they need to establish long-term relationships with their clients, helping them keep future business in-house and transforming the way they do business. Today’s has an interview with Bank of Oklahoma’s Chris Maloney on MBS issuance, the money supply, neutral interest rate, and his predictions for future Fed moves.)

High hopes and crossed fingers may help one’s outlook in advance of key economic data, but they are powerless once the data comes out.  In today’s case, the Job Openings data coincided with ISM Services at 10am to deliver a one-two punch to bond bulls.  Both were stronger than expected.  ISM was especially troubling. It is the heavier hitter of those two reports and several of the internal components added insult to injury (e.g. “prices” component at 64.4 vs 58.2 last time, not boding well for inflation next week).  Bonds saw the writing on the wall instantly.  Yields are now up to the highest levels since April 2024.

We came into the current week knowing that rates would take cues from any clear cues in this week’s economic data.  In general, that means higher rates in response to stronger data or lower rates if the data is weaker.   Today’s data was stronger across the board. One of the most closely watched economic reports that most people have never heard of–ISM’s Service sector index–was only a bit higher than markets expected, but the report includes separate components for things like employment and prices.  Today’s release showed a sharp increase in prices and that’s a particularly sensitive subject for rates these days. At the same time, the US government released job openings numbers which showed an unexpected uptick back to the highest levels in 6 months.  Higher jobs openings tend to coincide with higher rates. Incidentally, mortgage rates also matched their highest levels in 6 months today, last seen on December 19th and July 1st. On the plus side, this didn’t represent a huge move from yesterday’s latest levels with the average lender only increasing 30yr fixed rates by 0.04%.