The bond market was closed on Wednesday for the Juneteenth holiday.  As such, mortgage lenders were either closed or unable to update mortgage rates based on market movement.  Today’s rates are perfectly in line with Tuesday morning’s, on average, even though the bond market is slightly weaker.   Weakness in bonds refers to lower prices and higher yields/rates.  Mortgage rates almost always move with the bond market, but when the movements are small, there can be exceptions.  That’s the case today as the losses leave mortgage-backed bonds right in line with the levels seen on Tuesday morning.  Bonds did move on to stronger levels by Tuesday afternoon, but not to a sufficient extent for most lenders to update their pricing. The net effect is an average top tier conventional 30yr fixed rate that’s still a hair above 7%.  

Taylor Swift sang of a “Cruel Summer” and vendors and lenders hope that it isn’t. “If you ever get cold, stand in the corner of a room for a while. They’re normally 90 degrees.” Much of the U.S. is anything but cold. Today, depending on where you are on the globe, is the Summer Solstice, has to do with the tilt of the Earth’s axis and the Tropic of Cancer, an imaginary line circling the globe which marks the most northerly latitude where the sun can be directly overhead. Here in Hawai’i, in terms of daylight, the difference between summer and winter solstices is only about 2 ½ hours (versus 7 ½ hours in Seattle or 6 hours in Boston; nearly 0 at the equator). The U.S. Federal Reserve is not timeless like the seasons, but when it publishes something, people snap to. In this case, “Comparing mortgage rates that borrowers obtain to rates that lenders could offer for the same loan, the authors find that many homeowners significantly overpay for their mortgage, with overpayment varying across borrower types and with market interest rates.” Today’s podcast is found here, and this week’s is sponsored by Quontic whose mission is to help creditworthy borrowers obtain home loans and give them the “yes” they’ve been waiting for. Hear an Interview with Quontic’s James Hooper on innovative mortgage loan programs created to be adaptive to customers’ unique circumstances, reducing paperwork in the process. Software, Products, and Services for Lenders and Brokers

The rate of both construction permitting and residential construction starts fell in May, with permitting losing ground for the third straight month. The U.S. Census Bureau and the Department of Housing and Urban Development report that residential authorizations were issued at a seasonally adjusted annual rate of 1.386 million. This is a decline of 3.8 percent from the 1.440 million units estimated for April and 9.5 percent off the pace of the prior May. Permits for single-family construction were issued at the annual rate of 949,000 and multifamily approvals came in at 382,000. These were decreases of 2.9 percent and 6.1 percent, respectively. Thus, single-family permits increased year-over-year by 3.5 percent, but multifamily permits were 31.4 percent lower. [housingpermitschart] Housing starts fell from 1.352 million in April to 1,277 million, a loss of 5.5 percent . Starts declined 19.3 percent compared to the prior May. Single-family starts fell below 1 million for the first time since October at 982,000. This was a 5.2 percent decline from April and 1.7 percent lower than a year earlier. Multifamily starts, at a rate of 278,000 were down 10.3 and 51.7 percent from the two earlier periods. [housingchartall] Analysts polled by Econoday had expected both permits and starts to rise slightly above their April levels. The consensus forecast for permits was 1.450 million and.1.373 million for starts.

On Tuesday, bonds had an initial, positive reaction to the Retail Sales data that clearly ended mere minutes after the release.  Yields trended slightly higher in a narrow range into 11am at which point new rally momentum emerged, lasting through the close.  It was hard to explain that rally without relying on positional trading considerations. 
Specifically, we suspected traders were closing short positions as liquidity waned ahead of Wednesday’s holiday closure.  When this happens (usually leading into weekends and especially 3.5-day holiday weekends), it’s common to see a push back in the opposite direction on the other side of the holiday.  This morning’s paradoxical weakness fits the bill perfectly, albeit with a bit of extra momentum.

U.S. homebuilder sentiment unexpectedly declined in June to the lowest level this year as mortgage rates near 7% limited prospective-buyer interest and weighed on the demand outlook.

Activity grew at a slower pace from seven days earlier, as refinance volume retreated, according to the Mortgage Bankers Association.

The Federal Housing Administration floated a mortgagee letter that increases a funding entity’s responsibility for the actions of correspondents or brokers.

The agency is giving funds to 23 providers in 15 states and the District of Columbia.

A probe by the Chicago Tribune alleges sexual harassment and verbal abuse at the workplace.

CCM allegedly discouraged employees from reporting that they worked overtime, a suit claims.