Wouldn’t it be nice if you could know what was going to happen with mortgage rates before it actually happened?  Since the dawn of time in financial markets, there’s someone who’s willing to make a seemingly compelling prediction about the future for every person who’s willing to believe such things are better than 50/50 guesses.  When it comes to time frames as short as 24 hours, it’s a 100% coin flip. Reason being: Friday’s direction will be determined by the outcome of the Employment Situation (aka, the jobs report)–the single most important scheduled economic report on any given month.  This installment is particularly important because it’s in a unique position to influence the Federal Reserve’s decision on the size of the rate cut that will be announced in 2 weeks. Financial markets have long since adjusted to the expected outcome of the jobs report.  In other words, if jobs come in at or around 160k payrolls, that’s not actionable news even though it would constitute a big improvement over last month’s 114k.  It’s the scenarios where the payroll count is less than 100k or more than 200k where the market is more likely to go a bit wild. Under 100k would likely result in another meaningful move toward even lower rates than today’s (already the lowest since April 2023).  Over 200k would mean a quick return to the recent range.  For better or worse, it’s not out of the realm of possibility to see rates move by 0.1 to 0.2%.  Contrast that to the average change over the past 2 weeks of less than 0.05%. The report will be released at 8:30am ET which is well before mortgage lenders set their rates for the day.

Thursday morning had the highest concentration of economic reports so far this week with ADP, Challenger, Claims, and two flavors of Services PMI data.  The early employment metrics were weak.  ADP, specifically, pushed yields lower at 8:15am.  Jobless Claims were neither weak nor strong and bonds were free to drift sideways to slightly stronger after that.  The stronger ISM PMI data pushed bonds back in the other direction at 10am (no real reaction to S&P version). The net effect is almost perfectly unchanged trading levels heading into the PM hours.

“If you were born in September, it’s pretty safe to assume that your parents started their new year with a bang.” Are originators getting a “bang for their buck” when it comes to marketing to real estate agents? “Rob, have you heard that 20 percent of real estate agents account for 80 percent of transactions? And that most loan officers are calling on the 80 percent of real estate agents who hardly do any business?” Yes, I have. I’ve even heard worse: that 70 percent of agents don’t close any deals. I can’t verify that, but I can recommend three things. First, make sure that the time and energy you or your staff are spending is focused on courting agents who actually do transactions. Second, skim through the NAR website, as it is chockful of statistics that will help you. Third, the St. Louis Fed does a bang up job with stats, including the number of active listings… so let’s see… 900,000 listings and 1.6 million real estate agents… (Today’s podcast is found here and this week’s is sponsored by Stavvy. Moving real estate beyond paper documents. Stavvy is the digital platform that helps real estate professionals grow their business and ditch the paper process. Book a demo today! Hear an interview with Gallus Insight’s Augie Del Rio on his love for data and how his entrepreneurial spirit was cultivated from a young age in Mexico.) Lender and Broker Software, Services, and Loan Programs The best mortgage CRM is the one you’ll actually use… If your CRM isn’t making your life easier, making you more money or giving you the gift of time by automating tedious admin tasks then what’s the point? Aidium Mortgage CRM is built for the loan officer and embraced by the enterprise. Why? It’s got a complete Reporting Suite to measure personal and team performance over time. Does your CRM have 24/7 phone, chat, and email support? Aidium does. How about a Marketing Suite? Lead and Referral management? Pre-built email/SMS series. Start asking yourself if your CRM is actually working for you, or if it’s just another valueless expense. I want to see why Top-Performers trust Aidium.

The new offering from United Wholesale Mortgage replaces a July through Labor Day promotion that only covered certain FHA and VA refinance products.

The Department of Housing and Urban Development affiliate is adding data elements in line with a larger industry goal and advancing other promised initiatives.

Steady purchase demand still led to a positive August according to the Mortgage Bankers Association.

After hikes pinched profits across the industry, a move in the opposite direction could be the start of a more promising trend. But bankers caution that the immediate effects of a September rate cut figure to be small.

In a little over a month, the company’s newly appointed chief strategy officer has built out a six-person strong recruiting team.

Persistent Rally After Data. More Data Ahead

Wednesday ended up being almost exclusively about the Job Openings data in the morning.  Bonds were fairly flat before that and rallied sharply afterward.  Once the initial reaction ran its course (in mere minutes), the rest of the day was an uneventful drift in a rate-friendly direction.  Yields hit the 3pm close several bps under the 3.80% technical level in 10s, which makes this a bit of a “lead-off” to whatever extent you were planning on the 3.8-4.0 range remaining intact until Friday’s jobs report.   In other news, the yield curve uninverted at times–a fact that means nothing about the future even though you’ll certainly see claims to the contrary.

Econ Data / Events

Job Openings 

7.673m vs 8.100m f’cast
last mo revised to 7.91 from 8.18

Job Quits

3.277 vs 3.282m prev
(lower is better for bonds)

Market Movement Recap

10:08 AM modestly stronger overnight with additional gains after JOLTS data.  MBS up 6 ticks and 10yr down 4.7bps at 3.785

12:44 PM Sideways near best levels.  MBS up 6 ticks (.19).  10yr down 5 bps at 3.782

03:17 PM Best levels of the day with MBS up a quarter point and 10yr down 7bps at  3.763

Mortgage rates moved lower for the 2nd straight day on Wednesday with the average lender right in line with their lowest levels since August 5th.  In fact, most borrowers would see little–if any difference between today’s loans quotes and those from August 5th.  As such, today’s rates basically match the lowest in well over a year. This is made possible by a series of economic reports that have “played nice” with the notion of the Fed cutting rates by at least 0.25% at the next meeting in 2 weeks.  The bond market (which includes bonds that drive daily changes in mortgage rates) is constantly adjusting to get in position for the Fed’s most likely course of action.  By the time the Fed actually cuts, most of the mortgage rate movement associated with that cut will have already happened. If economic data is important in determining the near-term momentum, the next two days are critical.  Tomorrow’s combination of Jobless Claims and the ISM Services index will set the tone early, but it will ultimately be Friday’s big jobs report that provides the best chance for clarity on the Fed’s rate cut plans.   Weaker jobs data would increase the odds of a 0.50% rate cut, and mortgage rates would drop in anticipation.  Conversely, a stronger-than-expected jobs report would solidify the case for a 0.25% cut, likely pushing mortgage rates a bit higher in the interim. There’s no way to know which direction things will go in the coming days, only that there is greater potential for the move to be bigger than those seen in recent days.