Mortgage application volume took a big hit last week. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of that volume, plummeted 13.3 percent on a seasonally adjusted basis compared to the prior week and was down 4.0 percent before adjustment. Nearly all of the damage was on purchase side. That index decreased 18 percent on a seasonally adjusted basis and 4 percent unadjusted. The Index was 41 percent lower than the same week in 2022. [purchaseappschart] Refinance activity posted a more modest decline, down 2 percent from the previous week. The volume was 72 percent lower than a year earlier. Refinancing applications had a 32.5 percent share of the total, up a half-point from a week earlier. [refiappschart] “Mortgage rates increased across all loan types last week, with the 30-year fixed rate jumping 23 basis points to 6.62 percent – the highest rate since November 2022. The jump led to the purchase applications index decreasing 18 percent to its lowest level since 1995,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “This time of the year is typically when purchase activity ramps up, but over the past two weeks, rates have increased significantly as financial markets digest data on inflation cooling at a slower pace than expected. The increase in mortgages rates has put many homebuyers back on the sidelines once again, especially first-time homebuyers who are most sensitive to affordability challenges and the impact of higher rates.”
Source: Mortgage News Daily
On November 9th, 2022, the average lender was quoting 30yr fixed rates well over 7%. On day later, that figure dropped to 6.625%. It was one of the best individual days for rates on record and it was driven by an economic report that showed an unexpectedly large drop in inflation. Inflation and several other key sectors of the economy had pushed the Federal Reserve to hike rates at the fastest pace in decades. When it looked like the data might provide some relief, rates quickly moderated. Strangely (or so it seemed at the time), the Fed was highly reluctant to read too much into several months of generally more palatable data. They said it was too soon to draw any conclusions other than “it’s a start.” With that, markets hesitated to push longer term rates any lower until the data made an even stronger case of that. Unfortunately, the data since then has made a case for rates to turn around and head right back up toward previous highs. February has been particularly brutal in that regard and today was just the latest example. In fact, today’s reports aren’t typically regarded as top tier motivations for rate movement, but the market is so defensive to begin with that it doesn’t take much of a bump to create a snowball of momentum. The average 30yr fixed quote for a top tier scenario was around 6.75% on Friday and was up to 6.87% by Tuesday afternoon. More than a few lenders are already back to 7%.
Source: Mortgage News Daily
Data Fuels Ongoing Scramble Toward Higher Rates
Almost the entire month of February has been a mad dash from the lowest rates in months to the highest rates in months. The whole ordeal can be traced back to several key economic reports with mid-tier reports occasionally piling on. Today saw a surprisingly large reaction to mid-tier data (S&P/Markit PMI). The only way to reconcile the disproportionate reaction would be to add some extra overseas selling from the holiday closure and the overnight session (which also saw similarly strong PMIs in Europe). MBS jettisoned almost a full point and 10s spiked almost 14bps to 3.95+ by the 3pm close.
Econ Data / Events
Markit Services PMI
50.5 vs 47.2 f’cast 46.8 prev
Market Movement Recap
09:24 AM Weaker overnight with additional selling after Eurozone services PMI data. 10yr up 8bps at 3.904 and MBS down 5/8ths of a point.
11:31 AM Sharper selling after PMI data. 10yr up 10bps to 3.919. MBS down nearly 3/4ths.
03:45 PM Additional weakness in the PM hours, now leveling off in the after hours session. 10yr up 13bps to 3.951. MBS down 7/8ths of a point.
Source: Mortgage News Daily
Heading into the 3 day weekend, we knew there was a risk that Friday’s rally was driven by position squaring (i.e. traders buying bonds in order to cover short positions). Heading into the new week, new short positions are back in fashion. While a certain amount of this selling pressure may have been our destiny regardless, it received a clear boost from stronger Eurozone services PMI data.
Yields were already testing their weakest levels since early November. Then when US services PMI numbers came in stronger than expected, bond market weakness kicked into an even higher gear.
All of the above pertains to scarcely a few drops of paint against the broader backdrop of February. This month has delivered a harsh new reality that has taken many market participants by surprise. Surely, the rate spike of 2022 would be taking a bigger toll on economic data and the softer numbers would combine with tamer inflation to help rates ease back to lower levels.
But in 3 short weeks we’ve seen one of the strongest jobs reports of the past year, a big reversal in Retail Sales, an uptick in core CPI (and PPI for that matter), and several other reports that have contributed to a surprisingly resilient economic picture. The net effect is a rapid repricing of Fed rate hike expectations with the “farther out” meetings seeing the biggest revisions.
For instance, the chart below shows December’s meeting expectations rising from 4.375% to 5.125%. That’s THREE additional 25bp rate hikes above previous expectations. Looked at another way, the levels for June/September suggest the Fed will hike by 75bps over the next 3 months (25bps in March, May, and June meetings) and then hold steady for 5 months before cutting by 25bps in December.
Looked at ONE additional way, let’s just focus on June. It had been the terminal rate month (the month when the Fed is expected to hit its highest rate). It still is the terminal month, but it’s now seen 50bps higher than it was before the last jobs report. 50bps is a lot of ground to cover.
Source: Mortgage News Daily
Not every house is a 3 bedroom, 2 bath, single story subdivision home. Appraisers and underwriters aren’t big fans of places that aren’t, due to the lack of comps or the problems in “salability” should something go wrong. Inventive housing? Watch this house slide open to reveal Flexible Spaces (and an open-air bathroom). Some people have a home theater, but here’s a theater home for sale. And, finding homeowner’s insurance aside, what do kids do in this house when told to clean their room? Housing prices, just like mortgage rates, have at their base the influences of supply and demand. So this story is particularly interesting: “Investor purchases of U.S. homes fell by 45.8 percent on a year-over-year basis, with the largest declines occurring in pandemic boomtowns such as Las Vegas and Phoenix.” In other housing and finance trends, Seattle-based Flyhomes’ mortgage division is offering a “Buy Now Refi Later” promotion, where a homebuyer who takes out a loan with the company can refinance for free later if rates drop. (Today’s podcast can be found here and this week’s is sponsored by Agile, bringing the mortgage capital markets into a new digital era. From lenders to dealers, Agile is the new way to quote MBS. Listen to an interview with Ally Home’s Brandon Snow on the latest health gauges of the American housing market.) Lender and Broker Services and Products Real Data. Real Knowledge. Real Wealth. Homeowners and home buyers need insights into financial property data to manage their real estate and prospect properties to build lifelong wealth. Realfinity.io is now offering its white-label platform, HomeDashboard, to lenders and LOs, allowing them to deliver property data and mortgage products throughout the entire real estate lifecycle. The question isn’t whether your clients will get a platform to manage their home’s finances. The question is who will give it to them. HomeDashboard leads to higher deal certainty, repeat business and more referrals. Empower your clients to make data-driven decisions using your brand’s HomeDashboard. Let’s chat about what Realfinity can do for you! More at Realfinity.io, trusted by clients like Cross Country Mortgage and NFM Lending.
Source: Mortgage News Daily
NTXAMP 2023 Spring Golf Tournament

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Four Person Team Scramble
Woodbridge Golf Club 7400 Country Club Drive, Wylie, TX 75098
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Each golfer gets: Golf, practice balls, Patriot golf club, Opportunity at HOLE IN ONE prize of 25K and Awards Dinner
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Sponsors: Plan on bringing your own canopy tents, chairs and tables for your giveaways. Per TABC, no alcoholic beverages can be given away on the golf course (but you can sponsor a beverage cart!). Door prizes for the awards dinner are encouraged.
Legit Buying Demand or Position Squaring?
“Position squaring” is fancy market jargon that refers to closing previously open positions, but it can also refer to taking opposing positions to square up one’s risk exposure. A “position” is just a bet on rates moving higher or lower. Traders have been in short positions on rates this week (i.e. betting on rates going higher). Is the squaring of these positions for the 3-day weekend the only way to explain today’s moderate mid-day improvement or were there legitimate sources of inspiration?
Econ Data / Events
Import Prices
-0.2 vs -0.2 f’cast, -0.1 prev
Leading Economic Indicators
-0.3 vs -0.3 f’cast, -0.8 prev
Market Movement Recap
09:00 AM Slightly weaker out of the gate in Asia with additional weakness in Europe, but some resilience heading into domestic hours. 10yr up 2.5bps at 3.886. MBS down a quarter point.
10:29 AM Bonds bouncing back with 10yr yields unchanged at 3.857. MBS still slightly weaker, but well off their AM lows.
02:01 PM MBS edging into positive territory in the PM hours with 5.0 coupons up 1 tick (0.03). 10yr yields down 3.5bps at 3.828.
04:03 PM Best levels of the day in after hours trading. 10yr down 4.8bps at 3.815 and MBS up 5 ticks (.16).
Source: Mortgage News Daily
Nature is full of trivia. The moon moves about two inches away from the Earth each year. The Earth gets 100 tons heavier every day due to falling space dust. The climate, obviously, is part of nature. Climate, and natural disasters, impact our clients, people, insurance premiums, and the value of servicing in areas prone to hurricanes, flooding, forest fires, and earthquakes. A certain portion of those events (the number is increasing) are determined by FEMA to be natural disasters, and last year 3.4 million adults in the U.S. were at one point or another forced to evacuate their homes due to one, according to the Census Bureau. Approximately 1.4 percent of the American adult population. That’s a lot higher than historical averages, up to 800,000 on average for the years between 2008 and 2021. 12 percent were people displaced for over six months and 16 percent were adults who never returned home. The Mortgage Bankers Association’s (MBA) Research Institute for Housing America (RIHA) has published A Collection of Essays on Climate Risk and the Housing Market. It “was developed in response to the growing interest from industry participants on how various issues were connected to climate risk. The study features four essays from industry experts that focus on topline issues related to climate risk and its impact on the housing market.” (Today’s podcast can be found here and this week’s is sponsored by the STRATMOR Group, the data-driven mortgage advisory. At STRATMOR, insights and knowledge are applied to guide mortgage clients to make sound strategic decisions and take actions that improve their success. Todays has an interview with Partner Garth Graham on tech trends and adoption of tech solutions.)
Source: Mortgage News Daily
The current landscape is fairly simple. The bond market has been in the midst of a “repricing” event following the jobs report at the beginning of the month. Traders are “repricing” expectations for the Fed rate hike outlook. This has spilled over into longer-term rates. Until we have clear momentum heading in a friendly direction, the path of least resistance is for rates to continue redefining a new, higher range after failing to break through the new, lower range that was seen in December and January.
How do we know when we’re witnessing a capitulatory “repricing” event (not to be confused with mortgage lender reprices) for the broader bond market? We’ve posted charts on Fed Funds Futures over the past several days showing how longer term rate expectations have moved to match the peak/ceiling/terminal rates seen in the March/June Fed meetings. We’ve also clearly seen some abrupt selling in longer-term bonds and MBS. One thing that differentiates “repricing events” is the present of a slower grind that follows the bigger initial sell-offs.
This can be seen in the chart of this week’s movement in 10yr Treasury yields. Sure, we can break down some of the smaller moves inside the trend in the yellow lines, but most honest analysts will tell you that the general trend this week is NOT tied to the individual events that we connect to the small individual movements. Those same movements could result in a sideways trend or even a stronger trend in another market situation. In this case, the trading that surrounds those individual moves has been pervasively and mechanically weaker–as if the market were being guided by some robotic directive to make its way to higher yields in an orderly fashion.
Repricing events can be somewhat less orderly as well, especially when the revelations are bigger and/or more out of the blue. Some market participants would classify the Fed’s early 2022 tone shift as one of those less orderly events. Thankfully, the present repricing is more mild by comparison and should only continue to have serious legs if incoming economic data continues to justify concern over the inflation outlook or an overly hot labor market. Between now and whenever we get that data, all we can do is wait to see the point at which sellers have had their fill. This could happen at any moment–even today, but is only something we’ll be able to confirm after it’s already in progress.
Source: Mortgage News Daily
Another Day, Another Sell-Off
Bonds may not have sold off in an overly excessive manner today, but they sold off nonetheless. In other words, rates went higher. The early culprits were twofold: a surprisingly hot Producer Price Index and some comments from Fed’s Mester on the prospect of a 50bp rate hike. Then in the afternoon, Fed’s Bullard said similar stuff and went a step further, saying he wouldn’t rule anything out for the next meeting. All this after Fed members spent the past 3 weeks sounding unified on “25bps is all we need.” The sudden shift in tone spooked bonds a bit, but it’s still up to data to drive the decision. Fed Funds Futures suggest we haven’t yet seen enough data to price in a 50bp hike. The result is intraday volatility that gives way to moderate additional weakness.
Econ Data / Events
Jobless Claims
194 vs 200 f’cast, 195 prev
Core Producer Prices M/M
0.5 vs 0.3 f’cast
Philly Fed
-24.3 vs -7.4 f’cast, -8.9 prev
Housing Starts
1.309m vs 1.360m f’cast, 1.371m prev
Fed’s Mester:
SAW A ‘COMPELLING’ CASE FOR 50 BPS HIKE AT LAST FOMC MEETING
Market Movement Recap
08:56 AM Flat overnight and weaker after data and Fed’s Mester. 10yr up 2.7bps at 3.832. MBS down just under a quarter point.
09:44 AM Additional selling momentum in Treasuries with 10yr up 5.6bps at 3.859. MBS down just over a quarter point.
12:45 PM Nice bounce back underway since 10am. MBS down only 2 ticks (0.06). 10yr up only 3.5bps at 3.838 (down from 3.869).
03:09 PM Some quick selling pressure after Bullard comments on 50bp hikes. 10yr up 5.2bps at 3.855. MBS down just over a quarter point.
Source: Mortgage News Daily