The bureau claimed Newday USA deceived homeowners by failing to disclose the costs associated with a cash-out refinance when compared alongside their existing mortgages.

A gauge of pending U.S. sales of existing homes sunk in July to the lowest level on record, as high prices and borrowing costs continue to scare buyers away.

A Congressional Budget Office study looks under the hood at homeowners insurance and considers strategies like expanding the federal coverage beyond floods.

The average payment fell to $2,140 from $2,167 in June, according to the Mortgage Bankers Association.

Recent rate movements have failed to result in significant purchase growth, but refinances are providing lenders some lift.

A Clear Reaction to Data Without Any Major Drama

After this morning’s initial reaction to Initial Jobless Claims, the rest of the day was uneventful and sideways.  By 9:00am, 10yr yields had risen about 4bps to 3.866–which was the exact same level seen at the 3pm close.  MBS outperformed in day over day terms, but had a distinct moment of underperformance just after 3pm.  From here, we get into consistent daily doses of big ticket econ data culminating in next Friday’s jobs report.  Volatility potential is increasing accordingly.

Econ Data / Events

Jobless Claims

231k vs 232k f’cast, 233k prev

Continued Claims

1868k vs 1870k f’cast

GDP 

3.0 vs 2.8 f’cast, 

GDP Deflator

2.5 vs 2.3 f’cast, 3.1 prev

Core PCE Prices (q/q annualized)

2.8 vs 2.9 f’cast

Market Movement Recap

08:48 AM Modestly stronger overnight but losing ground after 8:30am data.  MBS down 2 ticks (.06) and 10yr up 3bps at 3.866.

11:20 AM weakest levels with MBS down an eighth and 10yr up 4.3bps at 3.879

02:34 PM small rally in PM hours.  MBS down only 2 ticks and 10yr up 2.9bps at 3.864

04:51 PM Off the weakest levels heading into the close with MBS down 3 ticks (.09) and 10yr yields up 2.7bps at 3.863

It continues to be the case that mortgage rates are moving in a very narrow range with minimal changes from day to day. For instance, in the past week, the average mortgage payment would not have changed by more than $2 a month on a $300k loan. That said, the past two days have seen the biggest movements during that time with today’s increase mostly erasing yesterday’s improvement.  The notion of rates moving “higher” is at odds with many of today’s rate headlines due to the release of Freddie Mac’s weekly rate index, which reported the lowest rate since April 2023 today.  Freddie’s survey is an average of Thursday through Wednesday’s rates, reported the following day.  This means that some of the days being counted will have seen even lower rates. Fortunately, our daily rate tracking leaves no doubt as to the recent movement.  As we already noted, yesterday’s rates were the 2nd lowest in more than a year, but still not quite as low as those seen on Monday August 5th. [thirtyyearmortgagerates] Will the average borrower see much of a difference?  No, but facts are facts, and at the average lender, a $300k loan would have cost you about a thousand dollars less on August 5th in terms of the upfront cost required to secure the exact same rate today.

Home sale numbers continue to retreat and in July the National Association of Realtors’® (NAR) Pending Home Sales Index (PHSI) fell to its lowest level…. Ever! Based on signed sales contracts for existing single-family houses, townhomes, condos, and cooperative apartments, the PHSI was down 5.5 percent from June to 70.2. This is 8.5 percent lower than the index for July 2023. [pendinghomesdata] The PBHSI is considered a leading indicator of home sales over the next one to two months. NAR cautions, however, that the amount of time between pending contracts and completed sales is not identical for all home sales. Variations in the length of the process from pending contract to closed sale can be caused by issues such as buyer difficulties with obtaining mortgage financing, home inspection problems, or appraisal issues. The index was benchmarked at 100 in 2001, a year in which contract activity was considered average.     “A sales recovery did not occur in midsummer,” said NAR Chief Economist Lawrence Yun. “The positive impact of job growth and higher inventory could not overcome affordability challenges and some degree of wait-and-see related to the upcoming U.S. presidential election.” The index fell month-over-month in all four major regions. The Northeast slid 1.4 percent to 64.6 but did pull off a 2.4 percent gain from the previous July. In terms of home sales and prices, the New England region has performed relatively better than other regions in recent months ,” added Yun. “Current lower, falling mortgage rates will no doubt bring buyers into market.”

“Why do psychics have to ask you for your name?” The future is always murky, at best, even to those who tell us that they can predict things. Fannie Mae raising gfees hit lenders everywhere without warning, catching capital markets staff with an un-hedgable hit. Costs everywhere are going up, and many or all of these are passed onto borrowers. More specifically, borrowers whose loans fund. Yesterday, Sandra James, CEO of Private Eyes, reminded me that the IRS is increasing the cost of 4506C’s from $2.00 to $4.00 starting October 1, 2024. “It depends on what our clients are paying and volume that they do if we will increase our price. Since we integrated with the IRS, if the consumer responds to the Multi-Factor Authentication, then it is instant, and no labor is involved on those. We charge from $6.00-$12.00 per year per transcript.” (Today’s podcast is found here and this week’s is sponsored by EarnUp and its new AI Advisor tool. The industry’s first-ever context-aware conversation agent instantly analyzes users’ real-time banking and credit data to answer complex financial questions and provide tailored product recommendations. Hear an interview with A&D Mortgage’s Alexander Suslov on running a capital markets department, recent rate movement, and how the election could impact borrowing costs.) Lender and Broker Software, Services, and Loan Programs What are the most important things for a lender to have in place to succeed in today’s market? Great people and great technology. Get new insights from Dale Vermillion, Founder and CEO of Mortgage Champions, on how solutions like ICE Surefire can help you succeed in today’s competitive landscape and maintain the personal touch you’re known for. Listen to his perspective now.

There was a solid decade between 2010 and 2020 where weekly Jobless Claims data was completely inconsequential.  The labor market had taken the hit from the great financial crisis and there was no meaningful role for Claims to play as an alarm bell for another shift. 
The pandemic brought renewed relevance for timely data, but after lockdowns ended, the labor market only went one way until the summer of 2023.  At the time, there was confusion regarding the imperfect seasonal adjustment factors, and there’s been a bit of a repeat in 2024. 

But when we look at the NON-adjusted numbers, we can see 2 things.  Not only is the summertime spike a normal seasonal pattern, but 2024 is not looking very different from 2019, 2022, or 2023 (and yes… it DID look different 5 weeks ago, which is one of the reasons for the sharp rally when NFP came out much lower the following day… i.e. it suddenly seemed like the labor market had shifted without warning).

Simply put, the adjusted numbers made it seem like the labor market was deteriorating in the summer, but it turned out to be inappropriate adjustment factors.
Incidentally, the chart above has been updated for today’s Claims data and the red line remains in the mix with recent years.  As long as that continues to be the case, bond bulls are deprived of the evidence needed to fuel the more aggressive rate rally scenarios.  That is the dominant reason for today’s moderate bond market weakness–not GDP, not the stale quarterly PCE data, not the deflator, etc.