Gen Zers had the highest rates of mortgage delinquencies that were up to 89 days past due.

About 85% of U.S. homeowners have interest rates below 6%, while a little over 50% of homeowners have a rate below 4%, Redfin’s report said.

The plaintiffs’ 2nd Circuit filing in the Bank of America escrow preemption case is the first since the Supreme Court sent it back for more analysis.

While listings are ticking up, house hunters are still struggling to find affordable properties. But thanks to high mortgage rates, there aren’t enough buyers in the market to create the level of competition that would drive prices up more significantly.

MBS Continue to Outperform, Sorta

Despite a nice little rally from weaker opening levels to stronger closing levels, it was a strikingly uneventful and uninteresting day for the bond market.  Yields continued to operate in the same old range with 15 of the past 17 days trading inside the range set on NFP Friday.  One of the only ways to concoct an interesting narrative would be to call attention to MBS outperformance (5.5 coupons were a bit stronger on the day while 10yr yields were a bit weaker). We could simply say “Treasury auction cycle” and be done with it, but that’s an oversimplification.  Besides, MBS don’t always outperform on auction weeks.  The more accurate observation is that the short end of the Treasury yield curve outperformed the long end, and MBS have more in common with the short end these days.  In other words, it wasn’t really outperformance by the time we compare MBS with the more appropriate benchmarks.

Econ Data / Events

Case Shiller Home Prices

up 6.5% y/y vs 6.0% f’cast
up 0.6% in June

FHFA Home Prices

down 0.1% in June vs +0.2% f’cast
up 5.1% y/y vs 5.3% f’cast

Consumer Confidence

103.3 vs 100.7 f’cast, 101.9 prev

Market Movement Recap

08:57 AM Steadily and moderately weaker overnight.  10yr up 4.5bps at 3.859 and MBS down an eighth.

11:40 AM MBS back to unchanged.  10yr up 2.9bps at 3.844

03:54 PM Best levels of the day for MBS, up 2 ticks (.06).  10yr down 1.5bps at 3.829

Economists are also forecasting faster and deeper cuts to borrowing costs over the next year, and see the central bank reducing the policy rate from the current 4.5% to 3% by next July.

The interagency Property Appraisal and Valuation Equity initiative, which was tasked by the Biden administration with rooting out bias in home valuations, appears to have run its course. But experts say it could be years before the group’s efforts bear fruit.

The Federal Trade Commission has arranged the payment of hundreds of thousands of dollars to people a law firm charged for lower rates they never received.

Lower interest rates could bolster loan demand, credit quality and securities portfolios. But they could also curb lending profitability faster than they ease deposit costs, crimping net interest margins and eating into near-term profits.

The company will fund the discount across the first two years through a special escrow account.