The Fed’s short-term rate cut hasn’t lowered 30-year mortgage rates, which have been flat, but some buyers had reasons to act sooner rather than later.

The lender has largely denied allegations Connecticut previously lodged that threatened its licensing, but the state has new concerns.

With earnings season set to kick off on Friday, investors will be paying close attention for any signs of loan growth and deposit pricing relief, though analysts don’t expect improvements to materialize right away.

Bonds Turn Green Despite Plenty of Volatility

It was touch and go in the mid-day hours as early stability (modest gains, even) gave way to steady selling.  Headlines from Fed’s Bostic (he’s not sure they’ll need to cut again in Nov) caused yields to pop to the highs of the day just before the 30yr bond auction.  After a decent auction, bonds calmed right down and slowly inched back into positive territory.  That’s a pretty decent result considering the 0.3 vs 0.3 core CPI reading this morning and the higher jobless claims number being subject to weather-related doubts.

Econ Data / Events

Jobless Claims

258k vs 230k f’cast, 225k prev

Core CPI M/M

0.3 vs 0.2 f’cast, 0.3 prev

Y/Y Core CPI 

3.3 vs 3.2 f’cast, 3.2 prev

Market Movement Recap

09:20 AM Modestly weaker overnight with mixed trading after data.  MBS up 2 ticks (.06) and 10yr up 1.1bps at 4.088

11:16 AM Back into weaker territory with MBS down 1 tick (.03) and 10yr up 1.5bps at 4.093

12:50 PM Under pressure on Bostic comments (open to skipping rate cut in Nov).  10yr up 2.1bps at 4.099.  MBS down 2 ticks (.06).

03:43 PM Nice recovery after 30yr bond auction.  10yr now down 0.3bps on the day at 4.075 and MBS up 2 ticks (0.06).

We can appreciate that the daunting task of determining what “the” actual mortgage rate may be at any given moment.  The word “the” is singled out in the previous sentence because there isn’t one, perfect, singular, “going rate” for a mortgage.  There’s a bell curve with most lenders near the center and a few outliers at the margins.   The only thing that comes close to being a constant across multiple lenders would be the bond market.  Specifically, prices of mortgage-backed securities (MBS) determine the value associated with loans originated by mortgage lenders.  Still, there are numerous variables that lenders control that determine what rates they can offer for any given price level of MBS. Looking at an individual rate quote from an individual lender is one way to know something fairly specific about rates, but of course things can still change for a variety of reasons between the initial quote and the closing table. In order to get a general idea of where mortgage rates are, it’s common to turn to a rate index.  In terms of circulation and historical availability, Freddie Mac’s weekly rate index is the only game in town.  Unfortunately, in terms of accuracy, on shorter time horizons, it leaves something to be desired–especially for those interested in knowing day to day changes.  Freddie’s survey is a 5 day average collected from Thursday through Wednesday and then reported the following day.  When things are moving quickly, that means several inputs to the equation will no longer be relevant.  We’ve also noticed that Freddie can quite simply undershoot the reality of a big, directional move, like the one we’ve seen take shape over the past 5 days. There’s no telling why this occurs, but it could have something to do with the fact that–even after methodology changes–Freddie’s survey still involves human input of rates that aren’t necessarily available anymore.

Hey, I like a good raccoon swarm as much as the next guy, but you couldn’t pay me to walk out there in that yard. Speaking of pay, a common question is how much how are LOs and managers paid, and STRATMOR’s blog is titled, “Lenders and Vendors Must Pay to Play.” Geographical differences have diminished in comp, but they still very much exist in weather and rental markets. The best weather of the year for different regions varies. While Florida is evacuating, it is arguably the best time of the year in the Midwest. Accordingly, Chicagoland has matched Miami’s long-standing dominance as the nation’s most competitive rental market, signaling housing pressures spreading beyond coastal hotspots. Renters struggled this summer due to high lease renewal rates and potential homebuyers remaining in the rental market, limiting available options, and creating strong competition for apartments. This change was boosted by the Midwest’s rejuvenated economy, coupled with a higher lease renewal rate of 69.5 percent and a drop in new units to 0.11 percent. NYC’s Manhattan is growing more competitive: With less than 5 percent of rentals still available and almost no new units opened recently, 65.8 percent of renters decided to stay put. This led to nine renters competing for a single unit, which typically got filled in 37 days. (Today’s podcast is found here and this week’s is sponsored by LoanCare. The mortgage subservicer is known for delivering superior customer experience through personalization and convenience. LoanCare is part of Fidelity National Financial, a Fortune 500 company and leading provider of services to real estate and mortgage industries. Hear an interview with Corporate Settlement Solutions Ashley Jelinek on trends in home equity and valuation.)

At first glance, it looks as if the bond market will make it through Thursday morning without being too worse for the wear.  When the monthly core CPI reading flashed 0.1 higher than expected (0.3 vs 0.2), there were clearly some doubts.  Yields popped higher initially, but milliseconds later, Jobless Claims said “not so fast…” by coming in much higher than forecast (258k vs 230k).  There are some “yeah buts” to be sorted out on that number, but it created enough indecision to prevent a runaway sell-off in the first hour after the data.  MBS are outperforming a bit due to the steeper yield curve (i.e. shorter term bonds doing better than longer term bonds, and MBS act more like short term bonds these days).

The move comes amid intense regulatory scrutiny of the commercial real estate market that has sparked a tightening of rules for lenders and brokers.

Flood maps, which designate areas where mortgage borrowers must buy policies are often out of date and don’t focus on the danger of rain-caused issues.

The recent rise in Treasury yields likely has technical drivers in the mortgage-backed bond market.