Bayview Asset Management and three affiliates reached an agreement in a data breach lawsuit for an incident that impacted 5.8 million customers.

Delinquencies are at their second highest level in three years, led by deterioration in the performance of FHA loans, the Mortgage Bankers Association said.

The fintech had over $2 billion in home equity line of credit volume in the third quarter and reported growing production in its crypto and non-QM offerings.

While Fitch and Kroll have differing views on mortgage rates next year, both are looking for mortgage delinquencies to rise in their rated portfolios.

The acquisition agreement is the latest example of merger activity this year focused on the recapture potential held within servicing pipelines.

Mortgage rates were only modestly higher on Friday, but because of the narrow prevailing range and previous increases this week, that brings us right in line with 2-month highs. Bonds (which dictate rates) began the day with promise. There was heavy buying (good for rates) in the 7am hour. This coincided with stocks challenging their lowest levels in weeks.  But both stocks and bonds bounced back in the 9am hour. Bonds ultimately erased all of the morning’s gains and, thus, the hope for today’s mortgage rates to be lower than yesterday’s. 

Gains Completely Erased; Stocks Looking More Culpable

Viewed in a vacuum, this mornings 7-8am rally remains enigmatic. There was some small case to be made that stock losses played a role, but the bond buying definitely didn’t line up with stocks in a normal way (i.e. it looked like there was some third variable that caused the bond rally to play out in a much more concentrated way). But as the day progressed, we saw stronger evidence of correlation between stock prices and bond yields. Specifically, a sharp rebound in stocks at the 9:30am NYSE open coincided with an equally sharp reversal in bonds. Yields ultimately leveled off 2.5-3bps higher on the day with MBS spending the afternoon in just barely weaker territory.

Econ Data / Events

ADP Weekly Payrolls (Tue, 11/11)

-11k 

Market Movement Recap

08:39 AM Initially weaker overnight, but now stronger after a big rally at 7am-730am. MBS up 5 ticks (.16) and 10yr down 5bps at 4.067

09:58 AM giving up most of the AM gains.  10yr down less than half a bp at 4.112.  MBS still up 3 ticks (.09) but down 5 ticks (.16) from AM highs. 

12:24 PM New lows.  MBS down 1 tick (.03) and 10yr up 2.7bps at 4.142

04:22 PM Heading out near weakest levels. MBS down 2 ticks (.06) and 10yr up 3bps at 4.145

Bonds were sideways to slightly weaker in the overnight session.  4am to 7am was exceptionally flat and narrow. This is notable because stocks had done more than half of their overnight selling by 7am, and stocks are one of the only scapegoats. In other words, a “flight to safety” (sell stocks/buy bonds) seems to be the only popular explanation, and it’s entirely unsatisfying when looking at stocks and bonds on a chart.  Our official take is: there’s a secret club and we’re not in it.  There are some straws we could grasp at, but feel less compelled to do so when the magical mystery move is an instant 5bp rally. 

For straw graspers, we can overlay UK bonds (which had some drama this morning) on the same chart and suggest that UK selling was preventing Treasuries from following the stock losses.  And once UK bonds reversed course, TSYs were free to rally.

I always wonder, when I see two gas stations near each other in a small town, if the owners agree on pricing and share information. But when you’re dealing with trillions of dollars of mortgages and millions of borrowers, well, that’s a different scale, and the leader and boards of directors should be held responsible if the news is correct. Per the AP, “A confidant of Bill Pulte, the Trump administration’s top housing regulator, provided confidential mortgage pricing data from Fannie Mae to (Freddie Mac), alarming senior officials of the government-backed lending giant who warned it could expose the company to claims that it was colluding with a rival to fix mortgage rates. CEOs report to boards, and some are saying that if Mr. Pulte and the Fannie and Freddie boards want to be relieved of their duties, they should have just resigned. And if nothing of consequence happens, what does that say about the housing finance system in the U.S.? (Today’s podcast can be found here and this week’s are sponsored by TransUnion. Mortgage lenders choose TransUnion for their identity-focused, data-driven mortgage insights and solutions, enabling them to achieve more desirable lending outcomes in a volatile housing market. Hear an interview with Telhio Credit Union’s Allie Hager on independent mortgage banks and credit unions differ in serving today’s borrowers, focusing on borrower sentiment around rates versus payments, strategies for building customer loyalty, and personal insights on professional growth and finding one’s comfort zone.)

Mortgage applications posted a modest increase last week, even as rates ticked slightly higher. According to MBA’s Weekly Applications Survey for the week ending November 7, total volume rose 0.6% on a seasonally adjusted basis and dipped 1% unadjusted. The Refinance Index fell 3% from the previous week but remains 147% higher than the same week one year ago. Despite the pullback, refi activity is still running at levels far stronger than anything seen in 2023 or 2024. Larger-balance borrowers continue to drive the category, though rising rates led to the smallest average refinance loan size in more than a month. Viewed in context, refi demand is still well into post-2020 recovery territory, even if weekly swings look choppy. “Purchase applications picked up almost 6 percent over the week to the strongest pace since September, despite mortgage rates increasing slightly, with the 30-year fixed rate rising to 6.34 percent,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Purchase applications for conventional, FHA, and VA loans increased, as potential homebuyers continue to shop around, particularly in markets where inventory has increased and sales price growth has slowed. Based on the unadjusted purchase index for the week, this was the strongest start to November since 2022.” He added that higher rates cooled refi demand, particularly among conventional and VA borrowers. Purchase activity rose 6% on a seasonally adjusted basis and 3% unadjusted, climbing 31% above the same week a year ago. After the slower stretch in late summer and early fall, purchase volume is finally showing signs of seasonal resilience.