KBRA says there is notable borrower equity in the properties collateralizing the mortgages, which is reflected in the weighted average original loan-to-value ratio of 71.7%.

May’s falling interest rates as well as ongoing wage growth helped improve home affordability across borrowing segments and racial groups, the Mortgage Bankers Association said.

Heather Lovier, a veteran at the company with over two decades of experience, will be in charge of overseeing the entire homeownership experience within the organization.

Back in The Range Without Needing Too Much Convincing

Unlike yesterday, the overnight session sent bonds into domestic hours at perfectly unchanged levels.  Almost all of the movement happened after the 8:30am econ data.  Connecting the data to the movement takes a bit of creativity and quite a bit of sorting.  We can immediately throw out the Q1 GDP data as being too stale to be relevant at this point.  That leaves Durable Goods (negative revision and big miss for nondefense, ex-air) and Continuing Jobless Claims as leading contenders.  Both may have contributed, but it’s hard to say which contributed more.  Either way, bonds rallied into the 10am hour and went sideways from there.

Econ Data / Events

Jobless Claims

233k vs 236k f’cast, 239k prev

Continued Claims

1839k vs 1820k f’cast, 1821k prev

Durable Goods

0.1 vs -0.1 f’cast
last month revised down to 0.2 from 0.7

Core Durables

-0.6 vs 0.1 f’cast, 0.3 prev

Final Core PCE Prices Q1 (ancient history)

3.7 vs 3.6 f’cast

Final GDP

1.4 vs 1.4 f’cast/prev

Corp Profits

-2.7 vs -1.7 f’cast

Market Movement Recap

08:43 AM Slightly stronger after AM data.  10yr down 3bps at 4.299.  MBS up an eighth.

01:05 PM Little changed after the 7yr auction.  MBS up 5 ticks (.16) and 10yr down 5bps at 4.279

04:16 PM MBS near strongest levels, up 7 ticks (.22).  10yr yields trading just under 4.29.

Mortgage rates rose at the fastest pace in 2 weeks yesterday, but that wasn’t a very tall order considering an almost perfect absence of movement leading up to that.  Now today, a good amount of that small amount of damage has been undone. Bonds responded favorably to this morning’s economic data, which suggested the labor market could be in the process of softening a bit, and that companies were less likely than expected to make big purchases in May (not including aircraft and defense spending). Bonds thrive on bad news for the economy (and bonds drive interest rates).  While this wasn’t the worst news in the world, it was far enough from forecasts to spur a modest rally in bonds and rates.   The top tier conventional 30yr fixed average remains just a hair over 7% for most lenders.  Bigger changes are possible in the coming days/weeks as more important economic data will be released. 

“What did people from the Midwest call a small can of pop? A Minnesota.” (Say it out loud to your 3 rd grader.) While we’re on a “pop,” lenders in the nation’s midsection are cheering the numbers as large cities in the Northeast and Midwest popped in 2023, reversing earlier population declines, according to Vintage 2023 Population Estimates from the U.S. Census Bureau. The South still rocks, however. Cities with populations of 50,000 or more grew by an average of 0.2 percent in the Northeast and 0.1 percent in the Midwest after declining an average of 0.3 percent and 0.2 percent, respectively, in 2022. Those in the West went up by an average of 0.2 percent from 2022 to 2023. Cities in the South grew the fastest, by an average of 1.0 percent, and 13 of the 15 fastest-growing cities were in the South, with eight in Texas alone. (Today’s podcast is found here and this week’s is sponsored by Candor. Candor’s authentic Expert System AI has powered more than 2 million flawless, hands off underwrites. Every credit risk decision Candor makes is backed by a warranty, eliminating repurchase worries. Hear an interview with American Pacific’s Bill Lowman on motivating people, change management during M&A, and retaining origination staff.) Software, Products, and Services for Lenders and Brokers With Truv, Revolution Mortgage saves 70 percent on verifications (+5 BPS savings per loan). What does Femi Ayi, EVP Operations, Revolution Mortgage, have to say about Truv? “Since we started our partnership, we’ve taken our costs for verifications from 8 basis points per loan down to 3 basis points per loan.” Truv has helped hundreds of lenders, from the biggest banks, IMBs, and Credit Unions, to the smallest, greatly improve their income, employment, asset, and insurance verifications strategy. You could be one of them: Get started!

It’s been an odd morning for the bond market, but not in an objectionable way.  In not so many words, bonds are rallying somewhat nicely despite an absence of obviously compelling data.  We can make a case for it, but it takes some doing due to the sheer amount of 8:30am line items.  Those can be whittled down by removing the stale Q1 numbers (GDP, PCE, corp profits, etc).  Of the remaining reports, only Durable Goods emerges as a solid scapegoat.  Headline readings remain low and the “core” (excluding defense and aircraft) was much lower than expected.  Even so, the rally is a bit bigger than we’d expect, but we’re not complaining. 

At this time of month, we can always consider the month/quarter-end trading environment, which can cause relatively big swings regardless of data.  But if that were this morning’s x factor, it’s extremely unlikely that the movement and volume would be substantially concentrated at the 8:30am mark (when all the data came out).

It comes as investors begin to reshuffle their portfolios at the mid-year mark, while traders earlier this week embraced bets on 3 percentage points of cuts over the next nine months.

Across the country over the past two years, the share of homes affordable to a first-time home buyer has fallen to 29% from 34% in 1Q23 and 45% in 1Q22, First American Financial said.

New York Mortgage Trust’s 9.125% notes due 2029 may help fund new purchases of mortgages and securitizations in the private or agency markets.