In Connecticut, a portion of the formal and informal talk here is about how builder news touches on lenders. (As an aside, Home Depot’s earnings, reported this morning, are solid.) Plenty of building materials come from Canada and Mexico, and the letter from the National Association of Homebuilders (NAHB) to President Trump asking for tariff exemptions on building materials caught people’s attention. But overall, builders seem to be doing just fine… Why should builders be in a rush to build more homes? Bill Pulte, part of the builder family, has been nominated to run the FHFA, conservator for Freddie & Fannie. PulteGroup grew closings by 9% and home sales revenue by 11% during a record-setting fiscal 2024. For the full year, the home builder generated home sales revenue of $17.3 billion, home closings of 31,219, and profit of $3.1 billion, or $14.69 per share. Drees Homes, the No. 41 company on the 2024 Builder 100 list, is acquiring the assets of San Antonio-based Monticello Homes. The acquisition grows Drees’ portfolio to 11 metropolitan areas nationwide, including the four major Texas markets. Empire Communities, the No. 56 company on the 2024 Builder 100 list, has expanded its presence in the Carolinas through the acquisition of Charlotte-based SouthCraft Home Builders. (Today’s podcast can be found here and this week’s is sponsored by Sagent. Sagent brings the modern experience customers now expect from loan originations to loan servicing, where lifetime customer relationships are managed and grown. Hear an interview with Sagent’s Omer Farooque and Perry Hilzendeger on key milestones one year after the launch of Dara, AI-driven innovations, real-time data solutions, and how their cutting-edge servicing technology is reshaping the mortgage industry.)

Over the past 4 business days, the average top tier mortgage rate has fallen by 0.22%. While that may seem like a small number, consider that mortgage rates haven’t moved half as much in either direction for the entire month up until this point. Looked at another way, the last time rates moved down this much, it took more than 3 weeks. While there are examples of rates dropping faster, the point is that the current pace is relatively rare. It’s made all the more interesting by the absence of what we would consider to be top tier motivations.  Such motivations typically include things like the jobs report, other key economic reports, major geopolitical events, or big policy revelations from the Federal Reserve.  The current example definitely draws on some downbeat economic data for inspiration, but not from reports that are usually responsible for this type of movement.  Additionally, the underlying bond market has continued to improve at a steady pace at times of day that suggest motivations beyond the economic reports. Long story short, bonds are in fashion at the moment.  When traders buy more bonds, rates move lower, all other things being equal. The broadest and most common explanations have to do with expectations for a downshift in global economic growth in response to domestic tariffs and cost-cutting efforts.  That topic is a can of worms in terms of complexity and counterpoints, to be sure.  Fortunately, it will either be confirmed or rejected by economic data in the coming months.  There’s more room for improvement if the data is weak and inflation is lower than expected.  Conversely, if it’s merely “vibes” driving the present bond buying spree and the data sings a different tune, there’s plenty of room for rates to bounce back up.

Through 1stResponder+, Rate is offering a complimentary one-year accidental death insurance policy that covers the mortgage balance up to $650,000.

The confabs are a sign that Republicans are getting serious about negotiating the contours of a tax deal, even as the House and Senate are pursuing separate strategies.

Consumer Financial Protection Bureau employees — most of whom are on administrative leave — were asked in an email to list what they accomplished last week. National Treasury Employees Union Chapter 335 said workers should list all the tasks they were told not to perform.

The real estate company’s latest move leverages artificial intelligence to optimize and simplify the entire home-buying journey for consumers.

Momentum against Maryland guidance that extends licensing requirements to securitization trusts is growing and some legislators want to scale it back.

Today I head to Connecticut for a visit with First World Mortgage and the Northeast Mortgage Summit. Today happens to be rocker George Thorogood’s 75th birthday, and mortgage bankers know that he re-did Amos Milburn’s 1953 classic tale of rent collection, land ladies, and payment avoidance. On a more serious note, I’ve been fortunate to spend some informal time recently with some fine mortgage minds discussing topics like the brutal administrative costs of bond programs, and perhaps a future allowing LOs to make price concessions to be competitive instead of the lender. The path forward for Freddie and Fannie, and the cost to consumers of that path, is a concern, but so is Agency innovation, building their executive ranks, keeping the “playing field” level regarding, for example, gfees. Competing against one another in a healthy way is a good thing, but some of the smarter minds believe that there will be a 75-100 basis point increase in rate when it eventually happens. Meanwhile, lenders continue to improve their product and technology, and in today’s episode of Now Next Later, Jeremy and Sasha talk with Melissa Langdale, Founder and CEO of Praxis Lending Solutions, about her expertise in the mortgage industry, the importance of collaboration, scalable solutions, and effective risk management for long-term success in the ever-changing market. (Today’s podcast can be found here and this week’s is sponsored by Sagent. Sagent brings the modern experience customers now expect from loan originations to loan servicing, where lifetime customer relationships are managed and grown. Hear an interview with Figure’s Michael Tannenbaum on capital infusions that will allow for growth in the home equity lending space.)

Mortgage rates were already in line with the lowest levels since December 18th by last Thursday. They dropped to the best levels since December 12th a day later. end of last week.  When today’s initial rate offerings came out, the average lender was unchanged from Friday, but as the day progressed, bonds improved and many lenders were able to offer a modest improvement.  The result is that we can once again say that rates are the lowest since December 12th, even if most borrowers would see no difference in loan quotes from Friday. The bond market (which underlies and dictates interest rate movement) was very calm today after early gains. Investors are waiting to see Friday’s PCE inflation data before making any big moves in either direction, but there is also some smaller risk of volatility surrounding other events this week.  Honorable mentions include the Treasury auctions on each of the 2 following afternoons as well as Thursday morning’s slate of economic data.

Bonds Improved Throughout The Day, With and Without Stock Market Losses

Based on the movement at the end of last week as well as this morning’s rally, it would be easy to conclude that bonds were benefiting from weakness in the stock market. While that is still arguably true, as the day progressed, we also saw that bonds were willing to hold their gains even as stocks tried to recover. There were no scheduled events that moved markets and a majority of the volume surrounded the first hour or so of the NYSE session. 

Market Movement Recap

10:10 AM Modestly weaker overnight, but rallying back into positive territory now.  MBS up 1 tick (.03) and 10yr down 1bp at 4.416

02:41 PM Flat and calm near best levels.  MBS up an eighth and 10yr down 1.8bps at 4.407

04:46 PM Heading out at best levels with MBS up 5 ticks (.16) and 10yr down 2.7bps at 4.399