Treasury yields fell sharply and the dollar weakened as investors pared bets on Republican Donald Trump prevailing in Tuesday’s U.S. election.

The joint venture with Smith Douglas Homes will expand Loandepot’s market presence in states including Georgia, Alabama and Texas.

Sens. Elizabeth Warren and John Hickenlooper say recent data suggests there is “no need for restrictive interest rates” and easier monetary policy is necessary to lower housing costs.

Election Remains Dominant Source of Volatility

While the average day of the past few weeks has involved election odds pushing yields higher, today was quite the opposite.  There’s some debate as to whether it was polling or betting market odds that got the markets attention, but less debate about the nature of the ifs and thens at a broad level.  A modicum of lower certainty of a Trump victory was the catalyst.  It was a spark that didn’t need to burn for long in this environment characterized by excessive dry powder for volatility. Bonds thought better of the overnight rally by mid-day, but not enough to undo the gains.  Ultimately, yields ended right about where they were before Friday’s jobs report.  Exciting stuff for today, but boring in the bigger picture. 

Market Movement Recap

09:48 AM Much stronger overnight on shifting election odds.  MBS up 3/8ths and 10yr down 11.3bps at 4.281.

11:21 AM Losing ground since 10am.  Still much stronger on the day with MBS up a quarter point and 10yr down 9.3bps at 4.301

01:33 PM New lows, still up 5 ticks (.16) on the day, but down a quarter point from highs.  10yr down 7.2bps at 4.322, but up from lows of 4.262

04:08 PM Off the lows from the last update.  MBS up 9 ticks (.28) and 10yr down 9.7bps at 4.297.

Up until last Friday, 10yr Treasury yields had consistently closed at 4.27-4.28 last week.  Now this morning, we’re at 4.27-4.28 again.  That’s the shortest way to explain that we’re not dealing with a meaningful rally.  It’s only impressive when considered against the weird, panicky starting point created by the weird, panicky sell-off on Friday. 

Another way to put this morning’s move into perspective is to remember that a 10-12bp rally right now is equivalent to a 3-4bp rally during more normal times. As for justification, the approaches are limited to two options: shifting election odds and/or a reversal of a pre-weekend position dump that’s now being reversed–probably a combination of the two.

Someone’s making money out there, right? Freddie and Fannie continue to earn billions, with a good chunk coming from g-fee income, and see hundreds of billions flow through their systems every quarter (for those playing along at home, their net worth, $90.5 billion for Fannie, $56 billion for Freddie, is healthy, but healthy enough to survive another 2008?). Lenders have seen their compliance & legal costs increase. (The CFPB announced that it had settled its fair lending case with Townstone Financial on Friday. Here is attorney Brian Levy’s take on the settlement from his Mortgage Musings blog. Sign up here if you want to get an email whenever Levy sends out his Musings.) There are rumors of another price increase from Fair Isaac, up from the current $3.50 per score; the parent of FICO’s stock price has doubled in one year to nearly $2,000 per share. Agency g-fees and credit reports factor into the cost of a loan. But compensation is still, by far, the largest cost component on any loan. (An informal poll indicates that LOs are often paid for 30 days after they leave.) (Today’s podcast can be found here, and this week’s is Sponsored by Calque. Partner with Calque to offer better loan solutions. Scale your business with a partner that puts your brand first and empower your clients to buy before they sell. Hear an interview with Rob Chrisman on takeaways from MBA Annual.) Lender and Broker Software, Services, and Products “In today’s competitive mortgage marketplace, customizing workflows and borrower experience is crucial to differentiation. With the industry-first configurability of Maxwell Point of Sale, lenders can define workflows for any mortgage product, while configuring triggers and business rules to align the borrower experience to operational processes. Maxwell Point of Sale also features more than 60 third-party integrations, allowing lending teams to seamlessly connect with other vital pieces of their workflow, from credit and verifications to pricing and disclosures. Maxwell Point of Sale also sees a 14% increase in pull-through from Rate Lock to Close on the vs a top competitor. Want to learn more? Let us know and we’ll show you what Maxwell can do for you and your borrowers.”

Love it or hate it, election-related volatility has been having a big impact on the bond market and, thus, mortgage rates.  Most of the volatility has resulted in higher rates, but there was an exception over the weekend.  Due to a combination of shifting odds in betting markets and among pollsters, rates recovered a portion of the ground lost last week. Mortgage rates didn’t react in an extreme fashion, but the average lender moved back down toward 7% for a top tier conventional 30yr fixed scenario.  The same scenario was closer to 7.125% late last week. To whatever extent we’ve seen election-related volatility so far, it’s a fair expectation that we’ll see follow-through after a winner is confirmed.  Our best read on prevailing sentiment is that a Trump victory will cause rates to move even higher whereas a Harris victory would lead to a friendly correction.  This is based on a assessment of how bonds have moved relative to several measures of election odds in addition to feedback and commentary from a substantial majority of analysts and traders. NOTE: these are only the outcomes associated with the immediate future.  No one really knows how rates would fare in the longer term.  There are scenarios where rates could move lower in a Trump administration and higher in a Harris administration.  

Esusu, Foyer, Divvy Homes and Tomo Mortgage are among the fintechs trying to give first-time homebuyers a break, alongside community development financial institutions like Southern Bancorp.

The Chicago-area lender, which at first was able to get the suit quashed, agreed to end the discrimination case by paying a $105,000 fine.

HomeStreet and FirstSun are working to devise a new formula after the Texas Department of Banking and the Federal Reserve declined to approve their merger application.