Mortgage rates have been holding in a fairly narrow range since the middle of last week and today was one of the least interesting additions to the trend.  The average lender is essentially unchanged versus yesterday, up a mere 0.01%, but down 0.02% from last Friday. Mortgage rates are primarily a function of trading levels in the bond market.  Bonds respond to a variety of motivations, but the biggest risks and opportunities are tied to major economic reports. With that in mind, it’s no surprise to see a general lack of movement recently as last week’s only major economic data was inconclusive.  Tomorrow morning brings the first potentially significant data of the week with several reports being released at 8:30am ET with Retail Sales being the headliner.  This is well before most any mortgage lender updates its rate offerings for the day.  There’s never a guarantee that economic data will move the needle.  All we can know is that potential volatility is higher.  The data would have to come in much higher or lower than forecast in order to cause a big move in rates. Even then, Retail Sales and tomorrow’s other reports are not in the same league as the mighty jobs report that sent rates screaming higher 2 weeks ago. 

An attorney will tell you, “Never miss a good chance to shut up.” Today I head to the Portland/Vancouver area for a few days with Banner Bank. Oregon has 12,000 licensed attorneys, Washington 27,000; number of regulators and administrators unknown. (Hear Mark Calabria interviewed tomorrow.) Banking Law 360 reported that, “At a tough-talking appearance in Utah on Friday, Consumer Financial Protection Bureau Director Rohit Chopra said he doesn’t sweat potential legal challenges to his agency’s rules and suggested some industry-side attorneys can be ‘leeches’ who relish compliance uncertainty if it boosts their billable hours.” Some will counter with, “Make the regulations clearer and there won’t be any uncertainty.” Still others will tell you that the CFPB, fearing a change in presidential administration, will be ramping up enforcement actions and fines. The CFPB is rumored to be cutting deals on settlements now, because regulators are worried they will all be undercut if Trump wins. Yesterday the CFPB announced that it and the Department of Justice took action against Fairway Independent Mortgage Corporation. More below. (Today’s podcast can be found here, and this week’s is sponsored by Aidium. Aidium’s CRM and Business Intelligence platform is the go-to system for lenders and enterprises serious about embracing technology to drive progress. Aidium boasts hundreds of integrations, a simple-to-use automation builder, reporting suite, and true AI for lead prioritization. Hear an interview with Aidium’s Spencer Dusebout on how technology is helping lenders increase margins, improve operational efficiency, and better serve clients.)

The market was hungry for data before the jobs report week and has been even hungrier since then.  Unfortunately, there haven’t been many compelling reports and, more importantly, no results that have been far enough away from expectations to cause much drama.  Last week’s Jobless Claims number could have been the only exception, but it was mitigated by hurricane related distortions.  The same will likely be said of Tomorrow’s installment, thus leaving Retail Sale as the week’s only big to-do.  As for today, it’s just another placeholder in the choppy, sideways drift that’s been intact since the jobs report.

The Consumer Financial Protection Bureau and Department of Justice issued a consent order against Wisconsin-based nonbank mortgage originator Fairway Independent Mortgage over redlining allegations. Fairway is the country’s fifth-largest mortgage originator by volume.

Ginnie Mae is more concerned about a small economic downturn than a large one and is working with other public entities to prepare and survive should it come to pass.

The settlement pending a judge’s approval would end the lawsuit over a hack last December.

Reversing a year-ago trend, the U.S. economy and plateauing interest rates led to credit tightening in September, the Mortgage Bankers Association said.

Hispanic-owned houses are worth 11.9% less than those owned by non-Hispanic White households, compared with 12.4% in December 2021, a recent high in the gap, Zillow said in a blog post

Uneventful Day, But That’s a Victory These Days

Last week’s bond market action offered some glimmers of hope that the most recent jobs report wouldn’t cause ongoing momentum toward higher rates, but yields nonetheless hit their highest levels on Thu/Fri.  Today is a victory in that context as bonds moved back into the lower half of last week’s trading range and all without any major market movers in play.  To be fair to the NY Fed Manufacturing index, it was a market mover and it did help set a rate-friendly tone out of the gate.  That said, the move looked more like a yield curve adjustment as opposed to a widespread bond rally (i.e. 30yr yields dropped 9bps while 2yr yields were basically unchanged).   Thursday AM’s data is higher consequence. 

Econ Data / Events

NY Fed Manufacturing

 -11.90 vs 3.8 f’cast 11.5 prev

Market Movement Recap

08:34 AM Moderately stronger overnight with a slight additional improvement after data.  MBS up an eighth.  10yr down 4.1bps at 4.059

11:32 AM Holding near best levels in Treasuries (most gains in longer durations).  10yr down 5.7bps at 4.044.  MBS up 5 ticks (.16).

02:13 PM MBS still up an eighth, but down 3 ticks (.09) from AM highs.  10yr down 6.5bps at 4.036

04:15 PM Heading out at essentially the same levels as the previous update.  MBS up an eighth and 10yr down 6.7bps at 4.035

The Fed’s cut has implications for mortgage companies’ costs and the lineup of providers keeps fluctuating.