Mortgage rates have run higher since the most recent Federal Reserve meeting as consumer spending points to economic strength.

Jason Mitchell, the CEO of The Mitchell Group, called the CFPB’s lawsuit against both his company and Rocket Homes “a witch hunt.”

The lender and servicer is spending $9.3 million on security upgrades in addition to its pending $25 million fund for consumers and their attorneys.

At least one buyer was looking for a barndominium, while another wanted a roller coaster, according to Zillow’s analysis of data from its home search feature.

Analysts are unsure what the Federal Open Market Committee will do with monetary policy in 2025. The panel projects two rate cuts, but some analysts expect more, and others see fewer.

Bonds are back in the office for a few days, at least in the sense that there are no holiday scheduled changes, and they’ve wasted no time getting right back to the messaging that’s been in force for most of the month. Specifically, the path of least resistance is for longer term rates to move higher at a faster pace than short term rates. Things like the jobs report early in the month or the Fed announcement last week have contributed to this steepening effect (fancy jargon for 10yr yields moving higher faster than 2yr yields), but there are days where that momentum seems self-sustaining without any additional motivation.  Today is just the latest example.
The following chart is from 12/24, but nothing has changed since then in the bigger picture.

Today’s only relevant econ data is weekly jobless claims, and there’s nothing interesting to report there.  Claims came in just under forecast, and even in non-seasonally adjusted terms, they continue tracking with the recent reference years.

“My housemates are convinced our house is haunted. I don’t get it. I’ve lived here for 273 years and haven’t noticed anything strange.” Many people would be just fine with a haunted house. There are many building-related developments that would help the nation’s housing shortage, if only the Agencies or investors or local areas were more open to them. Tiny (“micro”) homes and lower-priced, smaller homes. 3-D printing. Manufactured housing. Conversions from retail or office have also helped. Over the past decade, the number of malls has decreased sharply, from 1,318 malls in the United States in 2014 to just 1,141 malls in the country as of this year. The mall enjoyed its dominance for the decades following the 1970s, serving as a major incubator of brands and a crucial meeting spot for teens. Now, some “dead” malls are getting a new life as housing or community spaces. (The make-up of “live” malls has shifted: over the decades apparel square footage has dropped, entertainment has increased, and food & beverage is flat.) (Today’s podcast can be found here and is sponsored by Gallus Insights, the go-to reporting and analytics platform for mortgage lenders and servicers. Gallus makes it easy to access real-time data, create custom reports, and uncover actionable insights, all with a user-friendly design. Simplify your reporting, streamline your decisions, and drive profitability with Gallus Insights. Hear an interview with Realfinity’s Luca Dalhausen on the latest changes and happenings from the NAR settlement.)

Mortgage rates are based on trading levels in the bond market and bond market activity has been extremely slow, as is normally the case during the Christmas holiday week.  The side effect of the slow activity is the risk of more random volatility.  In other words, bonds (and thus rates) can move in either direction (or in both directions on the same day) for no apparent reason.   Today was one of those “both directions” days. At the start of the day, bonds were at their weakest levels in months.  As such, it was logical to see mortgage rates begin the day near their weakest levels in months.  Fortunately, the worst was over early in the day and bonds improved steadily from then on out.   Mortgage lenders prefer to set rates once per day and they typically only change when bonds move enough.  Today’s improvement was enough for most lenders to make friendly adjustments by the afternoon.  After those improvements, the average lender was back near the levels seen on Tuesday, and slightly below last week’s highs.   Top tier conventional 30yr fixed rates continue to operate near the 7.125% mark.

Friendly Reversal Thanks to 7yr Treasury Auction

The day began as so many days over the past few months with bonds moving higher in yield for reasons that transcend the typical economic data or news headlines. The Christmas holiday week is particularly random in terms of directionality due to low volume and liquidity.  That ended up being beneficial today  with a strong 7yr Treasury auction resulting in a favorable imbalance between buyers and sellers.  Light liquidity/volume magnifies the impacts of such imbalances.  The result was one of the biggest reactions to a 7yr Treasury auction in several years.  That’s not  a high bar, but was nonetheless worth 4bps in 10yr yields and a move from weaker to stronger territory on the day.

Econ Data / Events

jobless claims

219k vs 224k f’cast, 220k prev

Continued Claims

1910k vs 1880k f’cast, 1864k prev

Market Movement Recap

08:35 AM Moderately weaker overnight and little changed after data.  MBS down 6 ticks (.19) and 10yr up 4.9bps at 4.634

11:54 AM recovering somewhat.  MBS down 1 tick and 10yr up 2.6bps at 4.611

01:05 PM MBS now 1 tick higher after strong 7yr auction.  10yr yield up only half a bp at 4.59

03:14 PM Holding near best levels with MBS up an eighth and 10yr down nearly 1bp at 4.578

Mortgage rates should decline very gradually next year as the Federal Reserve will keep to its implied path of short-term rate reductions, Freddie Mac said.