With the growth in the use of government products, further increases in late payment rates over the coming year are likely, ICE Mortgage Technology said.

Newfi initially established its partnership with residential transition loan provider Dunmor in June 2024 to help it open up funding capacity and establish its presence in the lending segment.

A Government Accountability Office report Thursday said emergency actions taken by federal regulators in the wake of Silicon Valley Bank’s failure were justified and appear to have stemmed further disruption, but noted those actions could contribute to moral hazard.

Banks’ AI deployments will now be supervised by states and the companies themselves, experts say.

As forbearance starts to rise due to the fires, servicers that have just gotten a respite from hurricanes recoveries will have to gear up again.

Bonds Feeling Defensive Despite Trump’s Demands For Lower Rates

Bonds lost ground this morning despite slightly higher Jobless Claims. There are no obvious cases for causality apart from markets generally bracing for the impact of impending fiscal changes.  Some feel that tariffs will increase inflation.  Others feel that separate policies will increase growth (or decrease revenue). None of the above is good for rates.  Notably, Trump said he would “demand” lower interest rates in his Davos speech today and 2yr Treasury yields actually dropped enough to notice, but not by enough to suggest the market is reading much into it. 

Econ Data / Events

Jobless Claims

223k vs 220k f’cast, 217k prev

Continued Claims

1899k vs 1860k f’cast, 1853k prev

Market Movement Recap

08:31 AM Slightly weaker overnight and no major change after data.  MBS down an eighth and 10yr up 2.3bps at 4.634

01:52 PM Additional weakness into 11am hour but sideways since then.  MBS down 5 ticks (.16) and 10yr up 3.7bps at 4.469

04:08 PM Still sideways after AM weakness.  MBS down 6 ticks (.19) and 10yr up 3.3bps at 4.645

Yesterday’s recap began by calling attention to the “extreme dearth of big ticket economic data” this week.  Thursday AM brought the weekly jobless claims data–the first report of the week that had any sort of chance to cause some movement. A case could be made that it resulted in a very small, very temporary improvement in bonds. In context, however, this merely resulted in a brief departure from a prevailing trend toward modestly weaker levels.  There’s nothing interesting happening in the bigger picture as yields remain mostly sideways after last week’s CPI-driven recovery.

Note the seasonal volatility in non-adjusted claims (seen in two different ways in the charts below).  The point is that bond traders aren’t going to read much into small misses in this data series during the most volatile time of year with the highest seasonal distortions. 

“Be decisive. Right or wrong, make a decision. The road is paved with flat squirrels who couldn’t make a decision.” Potential borrowers wonder why mortgage rates haven’t “decided” to go down. Money is apolitical, and U.S. News reports, “Long before President Donald Trump regained control of the White House, he said on the campaign trail that he would drive down mortgage rates to 2% ‘by quickly defeating inflation.’ However, his policy proposals focusing on tariffs are more likely to rekindle inflation, while tax cuts are expected to increase the federal deficit, all of which could keep rates higher for longer. President Trump’s economic agenda could have a downstream impact on mortgage rates. Generally, the expert consensus points to higher rates as a result of Trump administration policy proposals. Research shows that tariffs tend to have an inflationary effect, potentially leading to higher mortgage rates and increased homebuilding costs. Bond pricing, and thus mortgage rates, are influenced in part by fiscal policy. Some of Trump’s proposed tax plans could increase the U.S. government’s debt burden and keep long-term interest rates elevated.” Time will tell! (Today’s podcast can be found here and this week’s is sponsored by Lender Toolkit’s new Prism. Experience a quantum leap in accuracy and efficiency as you streamline workflows, reduce errors, and close loans faster. Prism’s advanced OCR boasts 99 percent accuracy across 1,450+ document types. Effortlessly index, analyze, and underwrite crucial data with their intelligent system. Today’s has an interview with Angel Oak’s Tom Hutchens on demand in the non-QM space from both borrowers and investors.)

After several consecutive days without any noticeable changes, mortgage rates finally made a move today.  Unfortunately, that move was higher. Thankfully, it was neither extreme nor sufficient to challenge last week’s highs.  Nonetheless, it keeps the average lender uncomfortably close to the highest levels in 8 months with the most prevalent top tier conventional 30yr fixed rate being 7.125%. A common and accurate refrain is that rates will take cues from economic data.  This is especially true in the wake of the small handful of the most consequential reports.  But none of those reports were on tap for this week, thus leaving the market a choice between aimless drifting and reacting to political headlines.  We’ve seen some of both. Details on Trump’s tariff plans continue to be the most relevant data point for bonds/rates due to potential implications for inflation and economic growth.  Predicting the eventual impact is quite difficult because some market participants think tariffs will push inflation up more than they impede economic growth while others are just as sure of the opposite. 

Industry trends since the Great Financial Crisis have sparked rising interest in private asset-backed finance.