MBS RECAP: No Major Moves in New Week Despite Strong Econ Data

Posted To: MBS Commentary

Today's key scheduled event was the release of the ISM Manufacturing PMI–one of the several most important reports after the perennial heavy hitter, NFP (aka, the jobs report, which also comes out this week). The Manufacturing PMI has been stuck in a rut with the numbers indicating a contraction in the sector since last August. They were forecast to continue that trend today, but instead, we got the first expansionary numbers since July 2019. Given the bond market's willingness to react to last Friday's Chicago PMI (a sort of regional version of the national numbers represented in the ISM PMI), it was no surprise to see yields rise in response. This hit an already weaker bond market and threatened to take yields back above Friday's highs (1.592% in 10yr yields). More of a surprise…(read more)

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Source: Mortgage News Daily

Mortgage Rates Digging Deeper Into Multi-Year Lows

Posted To: Mortgage Rate Watch

In the world of interest rates, it’s good to be a mortgage today . The dominant species on that world is US Treasuries: the quintessential dollar-based loans (after all, they are loans to the US government). Loaning dollars to the entity responsible for the dollar is about as foundational as it gets, but I digress. Treasuries and mortgage rates tend to move in the same direction and by generally similar amounts. That’s because mortgage rates are based on underlying bonds (mortgage-backed securities or “MBS”) that are fairly similar to Treasuries in most of the ways investors care about. The prices of MBS dictate where lenders can and should set their interest rates, but ultimately, it’s up to the lender. If they’re flush with business and want to slow things down, they might set rates a bit…(read more)

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Source: Mortgage News Daily

Total Construction Spending Essentially Unchanged in 2019

Posted To: MND NewsWire

Total construction spending ended 2019 down slightly from the prior year. The U.S. Census Bureau said the total value of construction, both public and private, put in place during the year was $1.304 trillion compared to $1.307 trillion in 2018, an 0.3 percent decrease. Residential spending was down 4.6 percent from the prior year with expenditures of $520.9 billion. Non-residential spending gained 2.8 percent but annual gains in the various non-residential categories were modest. Only one type of construction rose by double digits; water supply projects were up 12.6 percent. This is a small dollar category however; total expenditures for the year were only $9.30 billion. The big losers were spending on commercial projects (down 11.3 percent) and construction related to religion (down 10.6…(read more)

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Source: Mortgage News Daily

Low Rates Boost Homebuying Power 16 Percent

Posted To: MND NewsWire

Black Knight, it the current edition of its Mortgage Monitor covering December mortgage performance data, writes an epitaph for slowing home price appreciation. Prices had been appreciating at an annual rate of nearly 7 percent in early 2018 but had fallen to 3.8 percent in August of 2019 as affordability worsened. But then, as Black Knight’s President of Data & Analytics, President Ben Graboske writes, “The national home-price-growth rate gained a good deal of steam as mortgage interest rates declined throughout the second half of last year. In fact, December marked four consecutive months of home price growth acceleration and the largest single-month acceleration in more than 6.5 years, while the annual rate of appreciation saw nearly a full percentage point increase over the last four…(read more)

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Source: Mortgage News Daily

MBS Week Ahead: Big Week of Econ Data Tempered by Virus-Watching Trade

Posted To: MBS Commentary

The total count of confirmed coronavirus cases will continue to grow for quite some time (several months, perhaps). Markets and epidemiologists alike agree on that fact. The greater unknown is the trajectory of that case count. The sooner/faster it decelerates, the more upward pressure for interest rates. The most relevant virus-related data continues to come out of China as that's where the sample size is by far the largest. Sunday saw the biggest day-over-day jump in cases yet (2825). In percentage terms, however, this was the slowest day so far. While I'm no expert, I do wonder where the threshold is in terms of reporting capacity. Perhaps every suspected patient who has sought medical help has been accurately diagnosed, but it's easier to imagine more than a few cases going…(read more)

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Source: Mortgage News Daily

Subservicer White Paper; Originator Census; Freddie and Fannie Updates

Posted To: Pipeline Press

“I boarded a Southwest flight over the weekend, sat down, sneezed, and muttered something in Mandarin. I had the whole row to myself for entire flight. It was great!” Sometimes things aren’t what they seem. When you “borrow” a trillion dollars a year, it gives every American over $3,000 extra per year for lifestyle and goods. It feels fine, the “borrowed” economy is good, right? But is the government being responsible? Truthful? Many liken the rising national debt level to a war: easier to get into than get out of. And seemingly easy to ignore. But there is a price to pay. Lender Products and Services MQMR asks, “Do you know what kind of reputation your subservicer is building for you?” Subservicer oversight involves more than ensuring compliance…(read more)

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Source: Mortgage News Daily

Homeownership Rate Still Barely Budging

Posted To: MND NewsWire

The homeownership rate seems stubbornly stuck only a few percentage points from where it bottomed out in the second quarter of 2016. The U.S. Census Bureau said the national rate in the fourth quarter of 2019 was 65.1 percent compared to 64.8 percent in both the prior quarter and the fourth quarter of 2018. The rate declined from a high of 69.0 percent in the third quarter of 2006 until reaching a low of 62.9 percent almost four years ago. The homeownership rate among the youngest Americans, those under the age of 35, increased by 1.1-point year-over-year to 37.6 percent. The rate gained a fraction of a point among all other age groups except those 35 to 44 years of age. Their rate declined from 61.1 percent in the fourth quarter of 2018 to 60.4 percent. The rate for Black households gained…(read more)

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Source: Mortgage News Daily

MBS RECAP: Bonds Forge New Lows After Yesterday's False Alarm

Posted To: MBS Commentary

When the World Health Organization declared coronavirus an international health emergency yesterday, there were two schools of thought. At first glance, it should have been good for the bond market as the announcement seemed to indicate things were getting worse. But bonds fairly quickly began moving in a counterintuitive direction. The only explanation at the time was that the declaration paved the way for the international community to more effectively combat the disease. The only other explanation was that traders were using that news as cover to get early month-end trading accomplished. We closed out the day yesterday without a clear answer, but that changed in the overnight session as bonds gained ground steadily. By the time the stock market opened, we were already on a roll. Then the…(read more)

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Source: Mortgage News Daily

Mortgage Rates Officially at New 3 Year Lows

Posted To: Mortgage Rate Watch

Mortgage rates inched even lower today as the market resumed efforts to react to and account for risks surrounding the coronavirus outbreak. Weaker economic data also played a part. That said, it’s good to remember that the market’s coronavirus reaction is all about the global economy in the first place. A massive epidemic is assumed to take a toll on the economy and slower economic growth helps rates and hurts stocks. Today was somewhat special because the average conventional 30yr fixed mortgage rate officially hit the lowest levels since the middle of 2016. This was more a factor of how low they already were yesterday. While today’s bond market improvement was fairly substantial it didn’t translate to a huge change from most mortgage lenders. Loan Originator Perspective Bond markets recouped…(read more)

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Source: Mortgage News Daily

MBS Day Ahead: False Alarm, But Still on Guard

Posted To: MBS Commentary

Yesterday offered up a fairly intense trading session for the bond market. Yields moved to the lowest levels in months with 10yr Treasuries hitting 1.534 in the afternoon. Shortly thereafter, the World Health Organization (WHO) officially declared coronavirus to be an international public health emergency. While that sounds like it might be good for bonds, the reaction was quite the opposite. The WHO's announcement helped stocks and hurt bonds because it paves the way for a more robust international response to the crisis. A more robust response would theoretically decrease the time frame of the epidemic and thus the economic impact. Additionally, the WHO reprimanded countries who have ghosted China in one of several ways (travel, trade, and screening were mentioned). Bond yields bounced…(read more)

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Source: Mortgage News Daily