It is quite likely March’s drop in the Purchase Application Payment Index will be transitory as mortgage rates have increased since the start of April.

While the 30-year rate landed near its level of a week ago, it ended up there only after political developments led to up-and-down swings in Treasurys.

The trend is not the norm but there are growing opportunities to buy for less in some areas many people gravitate to, real-estate brokerage Redfin found.

Sales of previously owned US homes fell in March by the most since 2022 as buyers remained constrained by high mortgage rates and prices.

Small-business owners will be given the option to tap into anywhere from $50,000 to $500,000 in financing.

Solid Bond Rally For Debatable Reasons

Bonds improved moderately well overnight and added to those gains steadily during the domestic session.  Ask 10 traders why and you might not get 10 different answers, but it would be at least 5. Improvement in the tariff outlook is a common refrain, but forex markets suggest that’s not a huge motivation.  Still, one could argue that a more sober approach is restoring some confidence for bond traders. One could also argue that traders are positioning for economic fallout with next week being the big week for econ data. Then there’s the notion that moving through the Treasury auction cycle was helpful, but it’s not as if traders didn’t know that ahead of time. Last but not least, a comment from Fed’s Hammack (saying the Fed could move in June) did align with some of this morning’s improvement, but not in a way that accounts for an entire day’s worth of gains. Perhaps we’ll have to dust off the “no news is good news” thesis and simply conclude it makes sense for bonds to be consolidating in the pre-tariff range until we get a clearer sense of policy and the economy’s response to it.

Econ Data / Events

Jobless Claims

222k vs 222k f’cast, 216k prev

Continued Claims

1841k vs 1880k f’cast, 1878k prev

Durable Goods

9.2 vs 2.0 f’cast, 0.9 prev

Core Durable Goods

0.1 vs 0.2 f’cast, -0.3 prev

Market Movement Recap

08:58 AM Stronger overnight with additional gains after uneventful data.  MBS up a quarter point and 10yr down 6+bps at 4.32

01:09 PM No major reaction to ho-hum 7yr auction.  10yr yields down 7.7bps at 4.312 and MBS up 3/8ths of a point. 

03:33 PM Best levels of the day.  MBS up nearly half a point and 10yr down 8bps at 4.31

“I hate it when I see an old person and then realize we went to high school together.” Nothing lasts forever, not top lenders or even computer companies. We may reach the point where only old people remember Tandem Computers, Commodore Business Machines, or Fairchild Semiconductor, all thought to be invincible in their time. Is Intel a measure of our economic health? Intel is laying off 21,000 employees. Now, all the talk is AI (see Thought Piece below). AI, of course, does not create new knowledge. Here’s a study showing that AI search engines invent sources and lie for ~60% of queries. Interestingly, OpenAI and Google are asking the government to let them train AI on content they don’t own. Google is shipping the latest “experimental” features of its Gemini 2.0 Flash AI model to more developers across all regions, and people are finding some concerning abilities that include editing out watermarks from photos. The company’s lightweight localized on-device AI model is now equipped with native image generation that can not only produce pictures from a text prompt but also let you conversationally edit images. Users found that it can also remove watermarks with precision, TechCrunch reports. Is that the right thing to do? (Today’s podcast can be found here and this week is sponsored by nCino, makers of the nCino Mortgage Suite for the modern mortgage lender. nCino Mortgage Suite’s core products unite the people, systems, and stages of the mortgage process. Hear an interview of nCino’s Casey Williams on some of the biggest opportunities lenders have to speed things up during the origination process, and technology’s role in that transformation.)

What’s “normal” for the bond market? That depends how far back you want to look.  Starting in late February, we had about a month of mostly sideways movement in a relatively narrow range as we waited for clarity on new fiscal policies and economic data. The tariff roll-out shook things up, to be sure, but for more than a week now, yields have been back in the same old “normal” pattern. So what’s next? That’s a good question. It could be a big policy shift, or economic data, or a global market event.  No one knows, but we’ll know it when we see it. 

As a counterpoint to the chart above, consider that shorter term bonds have been trending in the opposite direction and at a faster pace.

How to reconcile the outperformance of 2yr yields vs 10yr yields:
(remember that 2s have a lot in common with intermediate Fed rate expectations)

Mortgage rates continue the slow, bumpy process of healing from the rapid rise seen 2 weeks ago. Last week was a solid victory in that sense with rates moving steadily and meaningfully lower without any major rebounds. The present week started out on shakier footing as rates lurched higher on Monday. Fortunately, the sailing has been smoother since then. Today was actually the best day of the week so far for the underlying bond market. Most of the improvement happened in overseas trading overnight, but gains continued in the U.S.  The average top tier 30yr fixed rate fell 0.04% from yesterday. Based on the timing of the bond market gains, if nothing were to change overnight, the average lender would be able to move slightly lower again tomorrow.   NOTE: the preceding is not a prediction.  It’s merely a comment on the fact that the bond market improved a bit more than the average mortgage rate would suggest.  There’s never a guarantee that bonds will do any particular thing between now and the next time mortgage lenders are setting rates for the day.

So you want to buy a house but already own. These are your options. Many current homeowners would like to sell their home and trade up or down but aren’t sure how in this competitive Real Estate market. If you’re not feeling stuck because of a 2% pandemic era interest rate and resulting payment shock, then it’s probably the daunting task of selling and buying at the same time. Unless you’re one of the lucky few who can afford to purchase a new home without selling, you’re facing a difficult task. Years of strong housing appreciation have created the largest amount of home equity in US history. American homeowners have on average $315,000 in home equity as of Q4 2024 according to Core Logic. The problem most home shoppers face is how to unlock this equity before selling so they can become an attractive non-contingent buyer. Let’s explore the ways. A Home Equity Line of Credit can be a very useful tool when trying to access your homes equity. A HELOC will typically give you access to up to 80% of the equity in your home minus the balance of your existing mortgages. This is a very flexible financial tool. Payments are only due on the balance drawn on the credit line and those payments are typically only for the interest accrued on the loan. No principal payment is required, which keeps the payment low. Very handy when faced with the prospect of owning two homes simultaneously. This is a great option for prospective buyers who can afford the payments on both homes in the short term and who have enough equity available for a down payment on the new home.