The core personal consumption expenditures price index increased 0.1% from July, and on a three-month annualized basis, it rose by 2.1%.

Some recipients of the new multimillion-dollar funding announced this week include several organizations partnering with historically Black colleges and universities.

Specialized Loan Servicing allegedly charged borrowers $7.50 for processing mortgage payments made by phone. Most servicers, including Newrez, have axed this fee.

Finally Cooling Off Just in Time to Heat Up Again

Much of the past week has been spent monitoring the “post-Fed correction”–a nominal pull back in the impressive rate rally of the past several months following last week’s Fed announcement.  If you prefer “buy the rumor, sell the news” on the Fed rate cut, it’s the same thing.  By the end of this week, the correction finally looked to have leveled off, even if it got a bit of help from cooperative econ data.  The timing is frustrating for those looking to predict the future as next week brings us even more squarely into a data-driven episode for bonds/rates.  The not-so-frustrating thing is that the correction was never very large (downright small, even).

Econ Data / Events

M/M Core PCE

0.1 vs 0.2 f’cast, 0.2 prev
Unrounded 0.13

Y/Y Core PCE

2.7 vs 2.7 f’cast, 2.6 prev

Consumer Sentiment

70.1 vs 69.3 f’cast, 67.9 prev

Market Movement Recap

08:37 AM slightly stronger after PCE.  10yr yields are down 2.9bps at 3.769 and MBS are up an eighth of a point.

11:03 AM Giving up early gains.  MBS up only 2 ticks (.06) and 10yr down 2.3bps at 3.773

12:45 PM Best levels of the day now with MBS up 7 ticks (.22) and 10yr down 5.3bps at 3.743

05:18 PM Heading out at the day’s best levels or close to it.  MBS up 6 ticks (.19).  10yr down 4.6bps at 3.75

‘Tis the season for things to be something other than what they appear to be, apparently. Lenders are talking about new loan limits, but they haven’t officially changed. News stories are saying rates went lower this week, but they’re higher. And there’s even talk of a big refi boom, but as you may have guessed, that’s also not exactly right. Rates . Rates continued to move slightly higher (yes, higher), while remaining close enough to long-term lows.  This chart of 10yr Treasury yields (a proxy for longer-term rates like mortgages) does a good job of capturing all of the positive momentum seen in recent months as well as the mild correction that began after last week’s Fed rate cut. Things look even milder if we focus on mortgage rates.  In fact, one measure of mortgage rates (Freddie Mac’s weekly survey) is so mild that it actually went LOWER this week.  Sadly, Freddie’s numbers don’t align with reality this week.  We are normally able to use the objective daily numbers from MND to reconcile such discrepancies, but it’s not possible in this case.  If you want a deeper dive on this phenomenon, here you go: Mortgage Rates are 100% NOT Lower This Week. Loan Limits and Home Prices Other misdirection plays are much easier to explain.  For instance, you may see some lenders advertising new conforming loan limits that are near, or over $800k.  Official conforming loan limits are announced at the very end of November.  So who’s lying?

Just a few months ago, the big ticket inflation reports were just as relevant as the jobs report in terms of their ability to cause movement in the bond market.  As CPI/PCE calmed down over the past 5 months, bonds and the Fed shifted gears to place the heaviest focus on the jobs report and other labor market indicators.  But inflation will continue to matter until it becomes completely boring and we’re not there yet.  Thankfully today’s was just a bit better than expected and that’s helping bonds hold overnight gains. 

To understand just how well-behaved inflation data has been recently, forget the annual charts that are still peeling off the higher inflation months from last year and consider the very obvious trend in the month over month chart.  

These are rounded figures but the takeaway isn’t much different if we use the unrounded numbers.

“Who was the first person that used technology? Moses. He had two tablets that were connected to the cloud.” Technology is a two-edged sword. On the one hand, having everything on your phone is easy… until you lose it. Or it is confiscated. Tempted to voluntarily hand your phone to the police? I have heard repeatedly, “Don’t!” And here’s why. Technology has led to the popularity of Zoom & Team calls, but most prefer in-person events and workshops. (STRATMOR, for example, is conducting a typically well-attended Consumer Direct Workshop in Dallas in November that focuses on the CD channel.) Companies that service mortgages have a tremendous amount of tech at their disposal. Given the granularity of the data that is out there now, more parties than ever before know which loans/borrowers are “in the money” versus “out of the money” in looking at refinance candidates. Whoever holds the servicing rights, arguably, is in the best position to slice and dice the data and contact the borrower, although the LO will have the personal relationship. (Today’s podcast is found here and this week’s is Sponsored by Silk Title Co. Silk is for lenders who have centralized operations, are tech driven, process oriented, focused on the borrower experience, standardized in their approach, and most importantly… collaborative. Listen to an interview with CNET Money’s Katherine Watt on a recent survey that found 40 percent of U.S. adults are pessimistic about mortgage rates becoming affordable by the end of 2024.)

The 13 largest homeowners insurance underwriters denied almost half of their climate-related claims last year, adding to property owner and mortgage servicer woes.

New single-family home sales decreased 4.7% last month to an annualized rate of 716,000 after rising at the fastest pace since early 2022, government data showed Wednesday.

“A slight upward turn reflects a modest improvement in housing affordability, primarily because mortgage rates descended to 6.5% in August,” NAR Chief Economist Lawrence Yun said in a prepared statement.