Completed foreclosure auctions should be 8% lower this year, but if home value and unemployment expectations change, all bets are off, Auction.com said.

Mortgage companies under scrutiny could see a reprieve, while the status of functions like behind-the-scenes guidance inquiries is uncertain, experts say.

There are two main styles of measurement when it comes to keeping track of mortgage rates: daily and weekly.  Sometimes, the differences in methodologies mean that two reputable sources can convey seemingly incongruent conclusions.  Other times, both the granular and general data agree.  This is one of those times. Whether we’re looking at MND’s daily averages or MBA’s weekly survey, mortgage rates hit their lowest levels in 6 weeks by the end of last week.  The drop wasn’t immense, but based on today’s release of MBA application data, it was enough for a small bump in refinance demand.  As is constantly the case over the past several months, the scope of the mid-2024 spike in application activity is more easily understood with the benefit of additional historical context. Purchase applications are never as sensitive to rates over short time horizons.  In fact, they moved down a bit last week, but the counterpoint is that the purchase index has been holding near recent highs. Here too, broader context changes the takeaway. Other details from the report:
Refinances accounted for 39% of the total vs 37.1% last time
FHA loans accounted for 16.2%, down a bit from 16.7%
VA loans accounted for 13.3% vs 13.2%
MBA recorded 30yr fixed rates at 6.97 for the week with 0.64 discount points
Jumbo rates were 7.01 with 0.48 discount points

Nice Win For Bonds With Help From Data

There are plenty of moving pieces at the moment when it comes to assigning credit for various ups and downs in the bond market on any given day.  Many of those can only be guessed at–or at the very least, debated–due to the uncertain eventual impact from economic policies that have yet to be fully understood or implemented.  For example, some would say that bonds benefited from yesterday’s news that Trump intends to take over Gaza, but others would say it was a non-event.  One thing all bond watchers can agree on is that pedigree reports like ISM Services are highly likely to do logical things to bonds when they come in noticeably weaker or stronger than expected.  Today’s ISM data was weaker, including the price component.  As such, it’s no surprise to see an extension of the overnight rally just after the data, with the resulting trading levels lasting for most of the day.

Econ Data / Events

ADP Employment

183k vs 150k f’cast, 122k prev

ISM Services

52.8 vs 54.3 f’cast, 54.0 prev

ISM Prices

60.4 vs 64.4 prev

Market Movement Recap

08:27 AM MBS up just over an eighth of a point and 10yr down 5bps at 4.46

10:45 AM Gains continue after ISM data.  MBS up 9 ticks (.28) and 10yr down 8bps at 4.425.

01:08 PM Calmly holding best levels of the day.  MBS up 3/8ths and 10yr down almost 9 bps at 4.419

03:07 PM Down just over an eighth from highs, but still much stronger with MBS up 10 ticks (.31) on the day.  10yr yields down 8.4bps at 4.421

To say the very least, there are more moving pieces to consider at the moment when it comes to the narrative guiding volatility and momentum in the bond market.  Tariff and policy-related headlines have been good for ebbs and flows in risk sentiment, but haven’t necessarily accounted for a majority of the momentum.  That said, an absence of a more onerous tariff roll-out has likely been worth some relief in bonds. On a more material note, today’s Treasury refunding announcement confirmed the expected level of issuance this quarter–not groundbreaking news, but mildly reassuring at least.  And then there’s the fixture in the bond market movement game: economic data.  Today’s slate is limited to ADP employment and ISM Services when it comes to perennial market movers.  ADP was forgettable, but ISM missed forecasts both at the headline level and in the inflation component.  With that, bonds are off to a noticeably stronger start.

These gains are potentially more important than gains at another random level as they help make a case for pivot down below the 4.50 mark.

I know where to go when this Commentary writing gig grows stale. Wanna make 30 clams an hour? Costco’s hiring! (Remember when lenders and originators were very nervous about Costco taking over home lending? Or was it Amazon?) I doubt if CFPB employees will be checking out the listings, and I received this note from Florida. “Rob, I have heard rumblings about ‘doing away’ with the CFPB, created from the Dodd–Frank Wall Street Reform and Consumer Protection Act voted into law by Congress in 2010. Everyone in our business should be against doing away with, or de-funding, the Consumer Finance Protection Bureau entirely, as Ted Cruz’s proposed legislation would do, or Elon Musk’s beliefs. Do we, as lenders, want 50 different interpretations of LO comp plans? 50 different versions of what the consumer should understand when signing mortgage paperwork? 50 different states creating their own Ability to Repay laws? 50 different versions of servicing rules? What will that do to the cost of loans for lenders which are passed onto borrowers? (Today’s podcast can be found here and this week’s is sponsored by Optimal Blue. OB bridges the primary and secondary mortgage markets to deliver the industry’s only end-to-end capital markets platform, helping lenders maximize profitability and operate efficiently so they can help American borrowers achieve the dream of homeownership. Hear an interview with Optimal Blue’s Erin Wester on new products the company announced at Optimal Blue Summit in San Diego.)

The recent absence of volatility in day-to-day mortgage rate movement has been an easy target for light-hearted indignation among market watchers.  But to be fair, if rates had been moving swiftly higher/lower/both, most market watchers would wish for some sideways stability.  In fact, for most prospective borrowers as well as mortgage professionals, the only thing better than sideways stability is a healthy drop to lower levels. Now, after a week of utter flatness, we finally have such a drop. Rates are determined by trading levels in the bond market and bonds can be influenced by many factors.  One of the most reliable is the periodic release of various economic reports.  Today’s key data showed less strength than expected in the services sector.  In general, when an important economic metric is weaker than expected, it pushes rates lower, and vice versa. Today was no exception, but bonds had already improved even before the data came out. Connecting the dots of causality on that additional movement requires a bit more speculation, but some would say it has to do with perceived economic headwinds associated with new fiscal policies.  Conversely, others would say it’s due to the delayed timeline of implementation for those same policies.  Either way, the net effect is always measurable because we can always take inventory of multiple mortgage lenders’ rate offerings.  In doing so today, we find the top tier conventional 30yr fixed rate back below 7% for the first time since December 17th, even if only be a mere 0.01%.

The Federal Reserve terminated two mortgage-related enforcement actions against Wells Fargo & Co. from more than a decade ago, the central bank said Tuesday.

The Federal Reserve Board lifted two enforcement actions against the megabank dating back to 2011. But the Fed’s seven-year-old asset cap remains in effect.

Some mortgage stakeholders say Trump’s tariffs would make interest rates rise and housing costs shoot up.