Mortgage News

  • MBS RECAP: Bonds Scratch Out Victory Despite Headwinds

    Posted To: MBS Commentary

    Had it not been for a fairly abrupt sell-off in stocks (the first big day of losses in 2018, and the biggest open-to-close sell-off since late August for some major averages), there's no guarantee that bonds would have ended the day stronger. Even then, only some of the yield curve was stronger--specifically 7yr notes and higher. This is part of the "curve flattening" trade that dominated 2017 (2yr and 10yr yields getting closer together). That trade grew volatile at the end of the year as well as last week, corresponding with our last 2 big sell-offs. As the curve flattened over the past few business days, longer-term yields (which more closely follow mortgage rates) have been able to hold under key ceilings (like 2.60% in 10yr yields). There are important floors too --like 2...(read more)

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  • Mortgage Rates Still Working on That Ceiling

    Posted To: Mortgage Rate Watch

    Mortgage rates didn't move much today. Most lenders were just slightly lower/better this morning, but mid-day market weakness prompted several of them to reissue higher rates. In the bigger picture, however, the past several days represent a welcome stint of relative calm. The general trend had been toward higher rates beginning in mid-December. Granted, that general trend could continue and the past few business days could merely be a pause. But the point is, whether it's a pause or the beginning of a reversal, either would begin the same way. The important development in underlying bond markets has been resilience at the weaker (read: higher rate) levels. Using 10yr Treasury yields as a benchmark for rate in general, we'd want 2.60% to continue to act as a ceiling. The ingredient we're still...(read more)

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  • Housing Demands are Changing, Builders Slow to Follow

    Posted To: MND NewsWire

    Builders are building more houses, but a survey conducted by the National Association of Home Builders (NAHB) found they are essentially building the same ones . The survey, released during the association's International Builders' Show last week, found the size and configuration of homes built in 2017 changed little from the previous year , even though builders increased their output by 9 percent. Home sizes had been trending down , but they were up ever so slightly last year, from 2,622 square feet (SF) in 2016 to an average of 2,627 SF in 2017. Forty-six percent of homes had four bedrooms and 37 percent had at least three full baths compared to 45 percent and 35 percent respectively in 2016. Home builders continue to battle problems of affordability due to the scarcity of buildable lots...(read more)

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  • MBS Week Ahead: Light Data, Glimmer of Hope, and a Word of Caution

    Posted To: MBS Commentary

    Don't get too excited. Despite a few close calls and false alarms, bonds managed to close below last Tuesday's highs for three days in a row. Now they begin the 4th day in slightly stronger territory. To an optimist's eye, the bond market is building a case for a ceiling bounce. One way to approach such potential bounces is to consider the implication of technical analysis. One of the more mainstream technicals for this purpose is the Bollinger Band study. It consists of 3 lines. The middle is typically set at a 21-day exponential moving average (or a 20-day simple moving average), with the outer bands typically set 2x standard deviations higher and lower. This results in a moving range that ends up encapsulating most of the trading that takes place in any given security. That's...(read more)

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  • Natural Disasters and Compare Ratios; Q3 Performance and Fee Changes

    Posted To: Pipeline Press

    Replacing real estate agents with “something else that doesn’t earn a 6% commission” is certainly a discussion topic. Here’s one new venture: peer to peer real estate marketplace . But as Brian B. from New Jersey points out, “If a new company says it’s taking out the middleman and it will handle all the paperwork, isn’t it now the new middleman?” All I know is what I read in the newspapers, and The National Association of Realtors reports 88% of all buyers financed their homes the past year, but 98% of younger buyers financed, showing finding financing is especially key for young homebuyers. I guess they have less moola. At the other end of the mortgage process, servicers of loans along the Gulf Coast are now seeing increasing delinquencies from...(read more)

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  • Mortgage Rates Avoid More Dire Outcomes After Inflation Report

    Posted To: Mortgage Rate Watch

    Mortgage rates caught a break yesterday by moving lower for the first time this week. They arguably caught a break again today by not moving any higher than they did. Underlying bond markets (which drive mortgage rate changes) were rocked this morning by stronger inflation data. The important Consumer Price Index (CPI) was expected to hold steady at the same low levels that have persisted since the middle of 2017. The modest uptick in inflation sent bond yields higher and resulted in most mortgage lenders putting out noticeably higher rates this morning. Lenders don't like to put out more than one rate sheet per day if they can help it, but if markets move enough, they will "reprice." After the initial trauma, bond markets began a trend of improvement that ultimately resulted in widespread...(read more)

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  • MBS RECAP: China Must be Buying

    Posted To: MBS Commentary

    I laughed out loud today--something I rarely do when reading typed words--after MBS Live cornerstone Sung Kim quipped "thank God China is buying today!" This joke works on so many levels. Much of the week was devoted to chasing a red herring of a story that claimed China was mulling a reduction in its US Treasury portfolio. Rational people or those who believed the things I was yelling knew the story was mostly bogus, but it went fairly viral nonetheless because it offered an explanation for market movement that was otherwise not easily explained. Cue this afternoon's bond market rally. Bonds had just finished a fairly quick sell-off in response to this morning's stronger CPI data. Apart from technical levels and potential "value buying" among traders who think they've...(read more)

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  • Broker News; Mergers/Acquisitions; Guild to Buy Cornerstone

    Posted To: Pipeline Press

    Plenty of people tell me that I’m “long in the tooth.” (A way of gauging a horse’s age.) Tooth? Thanks to Emily W. for sending in something that all of us have probably wondered about, even though you weren’t aware that you were wondering about it: an article on the origin of "Bluetooth," "eBay," "Google," and other terms and names. Nomenclature, and technology, are always changing. The car business certainly changes, and it appears that with the recent Toyota/Mazda plant announcement, foreign auto manufacturers are on a path to soon surpass the Detroit giants as the largest auto producers in the US by volume! Foreign automakers and their US competitors are expected to produce the same number of vehicles in the US for the first time ever in 1Q18. Broker News -...(read more)

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  • MBS Day Ahead: CPI is the New NFP, Sometimes

    Posted To: MBS Commentary

    A majority of market participants (or their mentors) were steeped in the extraordinary inflation/rate volatility of the late 70's and early 80's. As the recovery from the financial crisis began, and as the Fed was pumping trillions of dollars back into the system, these market participants thus had an unhealthy fear of every little uptick in inflation at first. As reality unfolded, we've seen that worrying about inflation was a waste of energy at best, and a fool's errand at worst. I know I had a great time making fun of them from 2011-2015 at least. Things began to change in late 2015. Inflation began a quick and unequivocal return to relevance as core CPI shot up from a steady, depressed state at 1.6-1.7 to 2.3% by Febraury 2016. Had it not been for Brexit, we likely would...(read more)

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  • MBS RECAP: Another Strong Auction Helps Bonds After China News Debunked

    Posted To: MBS Commentary

    Yesterday morning's news regarding China potentially buying fewer (or selling) US Treasuries has been a big talking point. While most pundits and even a few traders jumped on the bandwagon right off the bat, we immediately flagged it as a Red Herring . By the end of business yesterday, there were a few good news stories that also began to push back on the suspicious assertion. But the best push back came from China itself, with the State Administration of Foreign Exchange going on the record saying that the news either quoted the wrong sources or was altogether fake . Enough of the market was conned into selling bonds based on yesterday's fake news that today's real news provided a bit of a rally opportunity overnight. The bigger move hit bonds in a negative way just after the European...(read more)

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