POS, Servicing Tools; Fraud, Home Equity, IMB Studies; New Companies Doing New Things

Any capital markets person will tell you, “What’s a surefire way to double your money in a casino? Fold it in half and put it back in your pocket.” I am in Las Vegas for First Colony’s Loan Officer Retreat, watching the tragic air news from Washington, and the MBA’s IMB in Austin has come to a successful conclusion. Yesterday the talk in the hallways was about “Donald Trump rescinding his OMB freeze. (There are other ways to accomplish his goals.) At the IMB, innovation is alive and well. How about a bank that shows you your carbon footprint on your statement? (Contact Dawn S. with questions about CI&T Bank.) There’s newzip, a “centralized real estate platform.” (Reach out to Casey H. with questions) There’s AMC Encore, sister company of RSDS Appraisal Diversity for appraiser training. (Contact COO Randy F. with questions.) Of course, the future of the CFPB’s focus is at play, as well as its action against Draper & Kramer Mortgage Corp. for discriminatory mortgage lending activities that discouraged homebuyers from applying to Draper for homes in majority-Black and Hispanic neighborhoods in the greater Chicago and Boston areas. (Really? Lenders discourage potential customers?) (Today’s podcast can be found here and this week’s is sponsored by Figure. 50 percent of the top IMB’s use them, and if you haven’t examined your HELOC & HELOAN strategy recently, it’s time to get on it. Hear an interview with Depth’s Kerri Milam on relationship management and brand awareness for individuals and companies in the mortgage industry.)

Stronger Start + Early Weakness

Bonds rallied in overnight trading. The move was exceptionally linear, without any obvious regard for movement in equities or European bonds. Yields were at session lows ahead of the 8:30am data, but have moved steadily higher afterword.  The early weakness almost perfectly offsets the overnight gains, leaving bonds close to unchanged heading into the PM hours.

GDP and Jobless Claims could equally contribute to the move.  Although GDP came in weaker than expected, the “whisper” numbers were lower as traders expected an even bigger hit from a rush of pre-tariff import activity.  The jobless claims result was more straightforward as 2025 has now dropped to the lowest level of non-adjusted, week by week jobless claims compared to recent relevant years.

Pending Home Sales Pull Back From Best Levels Since April 2023

The National Association of Realtors (NAR) released its Pending Home Sales Index (PHSI) for December this morning.  Pending sales measures the number signed purchase contracts for existing homes. As such, the index is a good early indicator for Existing Home Sales in the coming month. Pending sales dropped 5.5% from last month, which was the highest level for the index since April 2023. Sales had also been on a 4 month winning streak.  In other words, sales activity remains in solid territory, in the upper middle portion of the range over the past year.  As is the case with most housing-related metrics, that range is at historically low levels.  Regional breakdown of monthly and (year-over-year changes):
Northeast 

-8.1% (-1.3%)

Midwest

-4.9% (-6.9%)

South

-2.7% (-5.1%)

West

-10.3% (-5.1%)

Uneventful Fed Day, Bonds Eventually Agree

Uneventful Fed Day, Bonds Eventually Agree

There’s never a way to know with certainty that a Fed announcement will be uneventful, but if we had to assign relative probabilities, today’s looked much more likely than normal to pass without a trace. In the immediate wake of the announcement, that didn’t look like it was going to happen. Bonds sold quickly due to what seemed to be a notable verbiage change.  Then in the press conference, Powell clarified the verbiage change and bonds unwound their initial reaction. MBS and Treasuries thus ended the day perfectly in line with pre-Fed levels, like it never even happened.  

Market Movement Recap

10:17 AM Modestly stronger overnight and flat so far.  MBS up 2 ticks (.06) and 10yr down 1.1bps at 4.523

11:20 AM Into negative territory now.  10yr up half a bp at 4.54 and MBS down 1 tick (.03).

02:43 PM Initially weaker after Fed announcement, but recovering a bit during press conference.  MBS down an eighth and 10yr up 3.3bps at 4.568