MBS RECAP: Coronavirus Hopes Hit Bonds as Correction Continues

Posted To: MBS Commentary

So far, the correction to the coronavirus bond market rally is only a few days old, but it became much more problematic today. Yesterday was arguably the first day of the correction and at that point, we hadn't seen quite enough weakness to label it as such (merely to offer warnings about the risk of additional negative momentum). But today's weakness was nearly as big. Taken together with the small bounce on Monday, this week is starting to look fairly troubling for bonds . Interestingly enough, this wasn't destined to be the case today. In fact, by 3am ET, bonds were actually slightly better versus yesterday. Then came news of a newly approved anti-viral cocktail purported to treat coronavirus in China. Markets treated headlines as if a cure or successful vaccine had been newly…(read more)

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Source: Mortgage News Daily

Mortgage Rates Continue Bouncing Higher From Long-Term Lows

Posted To: Mortgage Rate Watch

Mortgage rates moved higher again today as investors reacted to updates about the coronavirus outbreak. This has been the dominant motivation for the big drop in rates over the past 3 weeks. Mortgage rates are determined by the bond market. When investors are worried about some negative impact on the global economy, bonds provide a safe haven to defend against risk and volatility. Excess demand for bonds pushes rates lower. As such, all the panic over coronavirus logically resulted in lower rates, but as of this week, things may be changing. While there are still plenty of reasons to be concerned, the news cycle surrounding the outbreak has officially entered the “glimmer of hope” phase. For example, a pharmaceutical company in China announced that it received approval to begin treating the…(read more)

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Source: Mortgage News Daily

Government Inconsistency With Student Debt Calculations is Preventing Homeownership. That Needs to Change.

Posted To: MND NewsWire

The Urban Institute (UI) says the five government mortgage lenders and their various ways of accounting for income-driven repayment (IDR) plans are inhibiting the ability of many potential homebuyers to buy a home. IDR plans are used by many student loan programs and require special handling in mortgage underwriting. The problem with an IDR arises in the calculation of the debt-to-income (DTI) ratio, the percentage of a borrower’s income that is committed to debt service including payment on student loans. While there has recently been a little easing of what had been fairly rigid caps on DTI, higher ratios still limit a borrower’s ability to get a mortgage or increase the cost of the loan. The three government agencies that guarantee mortgages, (FHA, the VA, USDA’s Rural Home Loan program…(read more)

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Source: Mortgage News Daily

MBS Day Ahead: Potential Coronavirus Correction, Day 2: It's Still Bad For Bonds

Posted To: MBS Commentary

Heading into this morning, it looked as if bonds would have a fighting chance, at the very least. The fight in question is against the big bounce toward higher yields that will inevitably follow a shift in the broader psychology (both market and medical community) surrounding coronavirus. Simply put, as soon as the tide turns in the battle against the disease, so too should the the recent stint of multi-year low rates. Yesterday's trading session was a prime candidate for "day 1" of that correction. This wasn't due to any specific update on the disease, but rather the cues sent by various financial markets. In particular, Chinese equities managed to carve out gains on their second day back from a weeklong holiday. The US bond market also happened to be at a very logical point…(read more)

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Source: Mortgage News Daily

MLO Jobs, Digital, Subservicing Products; National Events and Training

Posted To: Pipeline Press

Let’s take any brokerage or small mortgage banker, 10 loan officers doing an average of 3 loans per month for 30 loans/month. The company has the operations staff to handle the current amount, probably more. Does it make more financial sense to go out and hire a recruiter and/or pay a signing bonus for another LO, or increase the efficiency of the existing LOs through better marketing, training, and improving the process? Let’s say all you had to do was move MLOs from 3 loans to 3.5 loans per month. I’m no math whiz, but that’s 5 more loans per month, about the same as hiring 2 new LOs. And while you’re at it, have your Ops staff take advantage of training and conferences that are out there, many at no cost. Makes all the sense in the world to me, and it’s…(read more)

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Source: Mortgage News Daily

Lower Rates Push Mortgage Applications to a Six-Year High

Posted To: MND NewsWire

Mortgage application volume continues to benefit from lower interest rates. The Mortgage Bankers Association (MBA) said today that its Market Composite Index, a measure of that volume, reached its highest level since May 2013 last week. The 5.0 percent gain in the seasonally adjusted index during the week ended January 31 was solely due to strength on the refinancing side. Of note, the previous week was shortened by the Martin Luther King holiday and MBA adjusted the week’s results to account for the event. On an unadjusted basis the index, a measure of mortgage application volume, rose 20 percent compared with the previous week. The Refinance Index jumped by 15 percent to its highest level since June 2013 – and was 183 percent higher than the same week in 2019. Applications for refinancing…(read more)

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Source: Mortgage News Daily

MBS RECAP: Considering a Coronavirus Bounce for Bonds

Posted To: MBS Commentary

We knew we'd have to deal with it at some point, and now we have to wonder if it's already here: the coronavirus bounce. Why did we know it was coming? Nothing too complicated here… The recent rate rally was/is unequivocally driven by a big, uncertain, temporary factor that has required markets to position defensively for stuff that probably won't happen. Once it looks like the most dire coronavirus scenarios have been ruled out, we'd expect markets to give back the premiums they'd been paying for increased uncertainty. In other words, bond yields should bounce. Why are we wondering if it's already here? This one is simple too. The rate rally has been sharp. It's lasted a few weeks. It's taken rates back in the vicinity of recent long term lows. It's made…(read more)

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Source: Mortgage News Daily

Home Price Gains at Entry Level Vex First-Time Buyers

Posted To: MND NewsWire

Home price increases, as measured by CoreLogic’s Home Price Index (HPI) continued to pick up speed in December on an annual basis. However, they pulled back a bit from the sudden surge they had displayed in November. The HPI, which includes distressed sales, had a national rate of appreciation of 4.0 percent in December compared to a 3.7 percent gain in November. This continues a pattern of accelerating appreciation that began as interest rates fell back from their 2018 highs. On a month-over-month basis the index increased by 0.3 percent. The index had jumped from an 0.1 percent gain in October to 0.5 percent in November. As have other data sources, CoreLogic’s chief economist Dr. Frank Nothaft said, the reaccelerating price growth is hitting hardest at the lower priced tier of homes. “Moderately…(read more)

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Source: Mortgage News Daily

MBS Day Ahead: Dangerous Day For Bonds: What's Behind The Drama?

Posted To: MBS Commentary

In many respects, the market response to the coronavirus outbreak has been able to take cues from past experience with SARS in 2002/2003. In many other respects, markets are flying blind due to substantial differences between the past and present. In addition to the fact that coronavirus has already proven far more contagious and deadly than SARS (which is saying something considering it has been met with a more proactive sense of urgency), China's role on the global stage is also much bigger than it was nearly 20 years ago. And beyond all that, how could we forget that US/China trade relations are also a defining feature of global economic uncertainty? All that to say coronavirus matters. It's definitely been the biggest market mover of the past 3 weeks–especially for Chinese equities…(read more)

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Source: Mortgage News Daily

MLO Jobs; Non-QM, Vendor Products; Conventional Conforming Product Shifts

Posted To: Pipeline Press

Fitness instructor: “Have you ever done a marathon?” Me: “You mean like on Netflix?” Both take stamina (of some sort), as does merely looking at the U.S. Debt Clock website that Kim G. reminded me continues to click along. Originators and branch managers will tell you that recruiting MLOs and retaining customers are both marathons, and as mortgage rates have fallen (with the fear of the coronavirus negatively impacting economies), it didn’t take long for both to become difficult. LOs who were looking for other opportunities toward the end of 2019 are now busy tending their locked pipelines or contacting/protecting previous clients. I’ve heard from a few originators, “If I’m not mining my database, someone else is.” And CEOs are once again…(read more)

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Source: Mortgage News Daily