MBS RECAP: Big Bond Spike, Mortgage Rate Defiance, Lock or Float?

Posted To: MBS Commentary

Big Bond Spike, Mortgage Rate Defiance, Lock or Float? Today was characterized by an aggressive spike in 10yr yields that paradoxically followed a much weaker jobs report. The x-factor was/is the motivation that such a report could provide for lawmakers to make something happen on the stimulus front (bigger, sooner, or both). And bonds don't like stimulus. Treasuries were hardest hit. MBS said 'twas merely a flesh wound. And mortgage rates said "wait, what? I thought I only needed to look at lender margins." In other words, mortgage rates did best of all. The question of how to balance that resilience versus the potentially disconcerting trends in the broader bond market is the focus of today's huddle video. Econ Data / Events 20min of Fed 30yr UMBS Buying 10am, 1130am…(read more)

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Source: Mortgage News Daily

Mortgage Rate Rules Are Completely Out The Window

Posted To: Mortgage Rate Watch

Mortgage loans ultimately “turn into” bonds and those bonds have a certain value to investors. When those values change, so do the rates offered by mortgage lenders. This is basically a hard and fast rule. But it’s completely out the window right now. And that’s a good thing this week. It’s a good thing because bonds had a pretty bad week. 10yr Treasury yields–the most popular bond market benchmark–rose by more than 0.15%, making this the worst week since early August. Bonds take cues from economic data, Fed policy changes, inflation, and fiscal policy changes, to name a few. Economic data is the most consistent source of inspiration, and among economic reports, the big jobs report is by far and away the most important. In general, weaker economic data is good for rates. As such, it was no…(read more)

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Source: Mortgage News Daily

Innovations in Home-Buying Process May be Fueling Pricing Frenzy

Posted To: MND NewsWire

A noted housing researcher has analyzed the current frenzy of home buying and the rapidly escalating prices since the country emerged from its short-lived spring pandemic shutdown. Issi Romem, Senior Director of Housing & Urban Economics at Zillow, and a fellow at the Terner Center for Housing Innovation at the University of California, Berkley, explains his different take in an article in the New York Times . Romem looks beyond the usual suspects, reasons commonly cited for the superheated market, not totally dismissing them, but finding a few new ones to credit, or blame, for what is going on. He also says some of the explanations given for increased market activity are playing far less of a role than presumed. For example, he asks why the perceived motivation of consumers to acquire…(read more)

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Source: Mortgage News Daily

MBS Day Ahead: Why Are Bonds Weaker Despite Big Miss in Jobs Report?

Posted To: MBS Commentary

The cause and effect relationship between NFP (the "non-farm payrolls" component of the big jobs report) and the bond market is a tale as old as time. The bigger the beat in NFP, the more rates are supposed to rise. The bigger the miss, the more rates tend to fall. So why are rates spiking after NFP came in much lower than expected today? There are several potential reasons , but one of them is head and shoulders above the rest: today's NFP makes fiscal stimulus more likely in the short term, and fiscal stimulus puts upward pressure on rates! With the unemployment rate moving down to 6.7% from 6.9%, was today's jobs report really that bad? Yes, it really was! The unemployment rate is not the best indicator for the health of the labor market. Unlike the job count, which is…(read more)

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Source: Mortgage News Daily

Over 80% of Forbearance Plans are Being Extended

Posted To: MND NewsWire

Mortgage forbearances for homeowners affected financially by the pandemic declined slightly over the past week. Black Knight said that there were 200,000 plans scheduled to expire at the end of November, probably accounting for the majority of the 39,000-loan downturn in the various forbearance programs. Another 1 million plans are due to expire at the end of this month. As of December 1, there were a total of 2.76 million loans remaining in plans, 5.2 percent of the 53 million active mortgages in servicer portfolios and representing $561 billion in unpaid principal. Eighty-one percent of those loans have had their terms extended at some point since March. The number of GSE (Fannie Mae and Freddie Mac) loans in forbearance dropped by 25,000 during the week, leaving a total of 967,000 homeowners…(read more)

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Source: Mortgage News Daily

Servicing, MLO, Ops Jobs; Cybersecurity, VA IRRRL, Non-QM Tools; Events and Training

Posted To: Pipeline Press

Have you ever wondered why so many lottery winners go broke? If they had any financial sense, they wouldn’t have bought a lottery ticket in the first place. (By the way, aloha from Hawai’i! I’ve been saving my vacation pennies for nearly nine months, and this commentary comes to you from Maui. Yes, the alphabet here has 12 letters, 13 if you include a noise similar to what you’d say to a dog to get it to stop from jumping on the couch.) Lenders have a modicum of financial sense, and the MBA tells us that total production revenue (gross gain-on-sale margin) increased to 475 bp in 3Q up from 429 bps in 2Q (note that this number is most comparable to retail gain-on-sale margins reported by mortgage originators). The average pre-tax production profit margin was 203 bp up…(read more)

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Source: Mortgage News Daily

Mortgage Rates Well-Protected From Jobs Report Volatility

Posted To: Mortgage Rate Watch

Tomorrow brings the month’s most important economic report: the Employment Situation, often referred to simply as “the jobs report.” No other piece of economic data has remotely the same track record of inspiring movement in the bond market (which, in turn, inspires movement in interest rates). But not all interest rates are equal– especially not these days. Mortgage rates are in an advantageous position relative to benchmarks like the 10yr Treasury yield (which is typically an excellent barometer for mortgage rate momentum). Exceedingly strong demand for mortgage-backed bonds is part of the reason. That demand has been created both by the Fed’s bond buying programs and the fact that investors are hungry for bond market assets that have slightly higher yields than the vanilla options such…(read more)

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Source: Mortgage News Daily

MBS RECAP: Bonds Find Their Range Ahead of Jobs Report

Posted To: MBS Commentary

Bonds Find Their Range Ahead of Jobs Report The first 2 days of the month (yesterday and the day before) were all about a quick adjustment into weaker territory for the bond market. Today served as confirmation that the adjustment was complete. The result? 10yr yields are ready to digest tomorrow's jobs report from a relatively high perch in the low 0.9's. MBS are still in their own world, and nowhere near the weaker levels seen in early November. Moreover, rates are so high relative to MBS prices that lenders don't need to make big changes to rate sheets until bond market weakness gets extreme. Econ Data / Events 20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th) Jobless Claims 712k vs 775k f'cast, 787k prev ISM Non-Manufacturing PMI 55.9 vs 56.0 f'cast, 56…(read more)

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Source: Mortgage News Daily

Lots of Similarity But Some Surprising Differences Between Rents and Home Prices

Posted To: MND NewsWire

An analysis published on Black Knight’s blog indicates that rents and home prices don’t always rise or fall in tandem. The company says comparing trends between the two can sometimes be an apple and oranges situation; they are similar in some respect but vastly different in others. In Orange County, California for example, median sale prices for single-family home prices and monthly rent for them in Orange County California, look, at first glance, to be on the same trajectory, which is a fair long-term conclusion. However, a closer examination of the graph below shows larger divergences between them in short-term bursts. During the housing bubble home prices moved higher almost without interruption while rents for single-family houses trended higher at a slower rate and with some volatility…(read more)

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Source: Mortgage News Daily

Solution Engineer Jobs; Capital Markets Best Ex, Sales Tools; Non-QM Updates; Economic Rebound Losing Steam?

Posted To: Pipeline Press

With the COVID pandemic, it doesn’t quite seem like we’re in the middle of pro football season, although apparently the folks in Jacksonville will do anything for their team. Speaking of which, I decided to finally get a COVID test, thinking it was a nasal swab. Imagine my surprise when I pulled into the building’s parking lot and saw a sign, “COVID Testing in the Rear.” COVID is running economies around the world, and in this country the FHFA announced yesterday that current moratoriums that were set to expire on December 31st have been extended another month . (The foreclosure moratorium applies to Enterprise-backed, single-family mortgages only. The REO eviction moratorium applies to properties that have been acquired by an Enterprise through foreclosure or…(read more)

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Source: Mortgage News Daily