Mortgage Rates Move Slightly Lower After Retail Sales Report

Mortgage rates began the week with a modest move back up and over the 7% threshold, but managed to erase some of those losses today.  The improvement followed this morning’s Retail Sales data which came out weaker than expected. Mortgage rates are based on trading levels in the bond market.  Bonds pay attention to multiple cues at any given time.  Major economic reports are always among those cues as the health of the economy tends to coincide with rates (i.e. stronger = higher).  Retail Sales isn’t as big of a report as the Consumer Price Index (CPI) or The Employment Situation (the jobs report), but it’s a respectable supporting act.  Sales growth was surprisingly high in the data that came out in March and April.  May’s report showed a correction back to 0.0% growth.   Today’s report came in just barely positive at 0.1–a far cry from the 0.6 level 2 months ago and below the median forecast of 0.2.  In addition, it included a revision to May’s report from 0.0 to -0.2.  All told, it painted a less upbeat picture for the American consumer compared to a few months ago. A slower economy is less able to sustain higher interest rates for a variety of reasons–not the least of which being the suggestion of slower price growth.  With that, bond traders bought more bonds, thus pushing bond prices higher and yields (aka “rates”) lower.  Tomorrow is a market closure for the Juneteenth holiday.  Trading resumes on Thursday but we’ll be waiting until the end of next week for the next round of big ticket economic data.
Source: Mortgage News Daily

Referral, Retention, Pre-Approval, DPA, Cybersecurity Products; Webinars and Training This Week

It’s been 55 years since Bryan Adams’ Summer of ’69. (That’s 55 years prior to the latest CFPB action against a lender.) Here in Hawai’i, the population during that time has increased, but has leveled off in recent years at about 1.4 million (for perspective, matching San Diego’s population) housed in 572,000 housing units (62 percent owner occ). Nationwide, “tying the knot” before buying a place has become more optional over time. The U.S. Census Bureau released estimates showing that married-couple households made up 47 percent of all households in 2022, down from 71 percent in 1970. Estimates from the America’s Families and Living Arrangements also show that about 80 million U.S. households in 2019 were family households. Of those, 58 million were married-couple households, about 6 million were a male householder with no spouse present, and 15 million were a female householder with no spouse present. Additionally, nonfamily households were about 19 percent of all households in 1970, but by 2022, they made up about 36 percent of all households. Women living alone made up the largest percentage of nonfamily households in both 1970 (12 percent) and 2022 (16 percent). Fabled bachelor pads? The share of households with men living alone grew from about 6 percent in 1970 to about 13 percent in 2022. Today’s podcast is found here, and this week’s is Sponsored by Quontic whose mission is to help creditworthy borrowers obtain home loans and give them the “yes” they’ve been waiting for. Hear an interview with attorney Brian Levy on the Consumer Finance Protection Bureau’s inquiry into junk fees contributing to increasing mortgage closing costs.
Source: Mortgage News Daily

Bonds Back in The Game After Modest Miss in Retail Sales

It’s nearly impossible to avoid hearing the phrase “data dependent” when following financial markets these days and this morning’s movement is the latest reminder.  A mere miss of 0.1 vs 0.2 in Retail Sales has resulted in an immediate and obvious bond market reaction, even if it hasn’t been extreme in terms of the level of improvement. 

It also clearly benefited from a larger downward revision to last month’s reading (-0.2 vs 0.0).  The net effect is a move to the lowest yields of the week, but not as low as those seen last Friday. 

With the 20yr bond auction this afternoon and a market closure tomorrow, it would be a surprise to see traders try to improve on these gains without a surprise of some sort in the news.
Source: Mortgage News Daily

MBS Outperform as Treasuries Give Back Some of Last Week's Gains

MBS Outperform as Treasuries Give Back Some of Last Week’s Gains

After rallying from roughly 4.45 to 4.22% last week, 10yr Treasuries began the new week with a move up 4.28%.  MBS didn’t lose ground as quickly today, which is what you’d expect after they underperformed for a week as Treasuries rallied somewhat sharply.  It was a boring day in terms of data, events, and volume.  NY Fed Manufacturing didn’t have a discernible impact and traders were unsurprised by updates from Fed’s Harker.  The losses feel like a token correction with effectively no bearing on tomorrow’s directionality.  That majority of that honor goes to Retail Sales, or at least all rights are reserved by Retail Sales.  It would still take a big beat or miss to prompt a logical and meaningful reaction. 

Econ Data / Events

NY Fed Manufacturing

-6 vs -9, -15.6 prev

Market Movement Recap

10:22 AM Weaker overnight and steady selling early.  10yr up 6.6bps at 4.29.  MBS down nearly a quarter point in 5.5 coupons.

01:44 PM Bounce back a bit from weakest levels.  MBS down 6 ticks (.19) and 10yr up 4.8bps at 4.272

04:14 PM Flat all afternoon with both MBS and Treasuries in line with the previous update
Source: Mortgage News Daily

Mortgage Rates Back Above 7% to Start New Week

Mortgage rates moved modestly higher to start the new week.  With the average top tier 30yr fixed rate just under 7% on Friday, this meant a move to just over 7% today.   As always, keep in mind that a mortgage rate index is best used to capture the day to day  movement in rates as opposed to outright levels.  The latter can vary significantly depending on credit score, equity, occupancy, discount points, and lender margins. There weren’t any interesting or compelling developments driving today’s bond market movement (bonds dictate mortgage rate momentum).  It was an uninspired, uninteresting Monday without any significant economic data or bond market volume.  Things should be more interesting tomorrow, for better or worse, due to the release of the Retail Sales data at 8:30am ET.  While this isn’t in the same league as the jobs report or the Consumer Price Index, when Retail Sales come in much higher or lower than forecast, there’s often a noticeable reaction in rates.
Source: Mortgage News Daily

AI, Verification, LOS, Renovation, Valuation, HELOC Products; VA, HUD, Ginnie Changes and Modernization Efforts

This week includes Juneteenth, a reminder of how slow news traveled in the past, as well as the Summer Solstice. Here in Hawai’i, in terms of daylight, the difference between summer and winter solstices is only about 2 ½ hours. (Compare that to 7 ½ hours in Seattle or 6 hours in Boston.) People are already in town for the MBAH yearly conference. With MBA Chairman Mark Jones joining us this year, as at other state and regional events some of the talk is bound to include state legislative and regulatory committee work, the Mortgage Action Alliance and MORPAC, advocacy and lobbying, and the MBA’s state relations committees. At the originator level, no lender operates in a vacuum. Here’s a very handy website for you to research your own company as well as your competitors; Just type in the name of the company at the top. (It’s lacking in niceties but is chockfull of origination data including branch data.) Today’s podcast is found here, and this week’s is Sponsored by Quontic whose mission is to help creditworthy borrowers obtain home loans and give them the “yes” they’ve been waiting for. Hear an interview with Lender Price’s Paul Orlando on the launch of Bulk Price API, new PPE features, and what he’s been working on as it relates to AI. Software, Products, and Services for Lenders and Brokers Attention loan officers! Are you struggling to earn in today’s volatile rate environment? With Figure’s platform, borrowers get cash fast without giving up their existing low-rate mortgages, and you still get paid! Many of the biggest lenders already offer HELOCs through Figure’s platform, so what are you waiting for? The borrower-driven application process is low-touch and fast, with many finishing in as little as 1 day. Borrowers can apply in as few as 5 minutes, verify income and property value online, get autopay and credit union discounts, and in some states, even complete an e-notary, all while getting a lower rate than many of our competitors. When you’re ready to become a Figure Partner, email Anthony Stratis.
Source: Mortgage News Daily

Low Volume Monday Greasing Skids For Volatility

Last week, MBS underperformance was front and center.  One of the justifications was the fact that MBS almost always underperform when Treasuries go on a nice bull run and las week certainly qualified.  The next step in that line of thinking would be to assume MBS outperformance when Treasuries leveled off or corrected.  This morning fits the bill.  10yr yields are up 6bps at 4.286–a move of half a point in terms of 10yr note prices.  5yr notes are down a quarter point in price.  Meanwhile, 6.0 MBS are down only an eighth of a point and 5.5 coupons are down only 7 ticks (.22).  As for the weakness itself, underlying motivations are not jumping off the page.  Volume is very low.  As always, that can grease the skids for random volatility, and a sell-off is the less surprising option after coming off a strong week that began to run out of steam by Friday.
Source: Mortgage News Daily

Once More: What's Up With MBS Underperformance?

Once More: What’s Up With MBS Underperformance?

The notion of MBS underperforming Treasuries is front and center today–not because that underperformance is especially large, but mainly because MBS were often in the red while Treasuries were in the green.  We have nothing new to add to yesterday’s similar discussion of MBS underperformance but have nonetheless attempted to add a few thoughts in today’s video. As for nuts and bolts, it was a boring day for bonds with modest gains for the long end of the yield curve (one major reason for MBS underperformance) and an uneventful, sideways grind in the afternoon.  

Econ Data / Events

Import Prices

-0.6 vs 0.0 f’cast, 0.6 prev

Export Prices

-0.4 vs 0.1 f’cast, 0.9 prev

Consumer Sentiment

65.6  vs 72.0 f’cast 69.1 prev
1yr inflation exp. unchanged 
5yr inflation exp. +0.1%

Market Movement Recap

08:58 AM stronger overnight, but giving up some gains in the past half hour.  MBS up 1 tick (.03) and 10yr down 2.7bps at 4.218

11:54 AM Choppy trading in a narrow range.  MBS underperforming with 5.5s down 1 tick (.03).  10yr yields are down 3bps at 4.215

03:14 PM Zero change from the last update and very little volatility between now and then.
Source: Mortgage News Daily

Mortgage Rates Remain Close to Recent Lows Despite Modest Bump

Today saw the average conventional 30yr fixed rate rise ever so slightly for top tier scenarios.  Most lenders are still quoting those scenarios just under 7%.  Depending on the specific details of any given scenario, rates range from the mid 6’s all the way up to the mid 7’s.  Unlike each of the past two days, there weren’t any major flashpoints for the bonds that underlie mortgage rate movement today.  There were a few economic reports, but neither had a big impact on the market.  All in all: a very calm and boring day–especially compared to almost any other day since last Friday. From here, the market will wait for the next big ticket economic report: Tuesday’s Retail Sales.  There are a smattering of other reports next week, punctuated by a holiday closure on Wednesday for Juneteenth. The biggest, most significant movement likely still depends on the economic reports that we just saw and won’t see again for nearly a month.  It wouldn’t be a surprise to see a more sideways, slightly choppy trend between now and then.
Source: Mortgage News Daily

Tired Friday For The Bond Market–Especially MBS

The bond market has a lot on its mind after this past week of economic data and events.  Inflation quickly and increasingly looks like it may (finally) be turning the long-hoped-for corner.  Timely employment metrics raise questions about labor market softening and Fed speakers are so eager to avoid jumping the gun on rate cuts after the Q1 inflation surprise that traders may wonder if they’ve moved from one side of the center to the other. 
Nothing about today will change or inform any of that, it seems.  We might have hoped that Import Prices would add to the disinflationary vibes, but alas, bonds actually lost ground after that (though not necessarily because of it.  After Consumer Sentiment data also failed to inspire, it’s clear that bonds are checked out for the week and the trades coming in are occurring for reasons that are unrelated to today’s events.
Source: Mortgage News Daily