When camping here at Yosemite National Park*, you quickly realize that there is one basic product here that has never changed: nature. Mortgage products, however, are always shifting and changing. How’s your adjustable-rate mortgage offering, and training, for LOs? The ARM share of applications last week reached nearly 8 percent. Builder business is another segment always of interest to lenders and vendors, and today’s TMC “Rundown” at noon PT features Robert Dozier with Palmetto Citizens discussing builder business, a credit union building out its mortgage presence, and what it was like being in the room with the team putting together the housing related statements for Biden’s State of the Union address. (Found here, this week’s podcasts are sponsored by Essex Mortgage. Essex specializes in providing exceptional mortgage subservicing solutions tailored to meet your specific needs. Looking to capitalize on your excess servicing strip? Check out Essex’s servicing offerings today! Hear an interview with originator Josh Mettle on the massive changes that are coming in July with the buyer-agent commission issue.) * (I am only bragging a little: sleeping on the ground and then getting up at 4AM to send this out with a flashlight from a tent sitting Indian style is no picnic. It is amazing to me that I have internet while surrounded by granite mountains.) Lender and Broker Products, Software, Services “Are you struggling with scratch and dent loans or small MSR pools? This is our sweet spot at PR Mortgage Investment. We specialize in transforming challenges into opportunities for Independent Mortgage Bankers. Let us turn your unsellable loans and underappreciated servicing into cash. Contact Shane O’Dell or call 602-402-1599 to ensure you receive the fair bids your portfolio deserves.”

Rocket Cos. reported an increase in gain-on-sale margin but warned that going forward it is likely to slip back to levels seen in the second half of last year.

The 2022 vintage had a higher percentage of purchase mortgages, as well as 30-year fixed-rate loans versus the 2021 production, an annual Federal Housing Finance Agency report said.

Almost half of parents said their grown children returned to live with them after graduation, placing greater challenges on their own long-term housing and retirement goals, according to a recent survey.

In total, 84 producers from mortgage lenders including Summit Funding and Movement Mortgage have transitioned to Fairway Independent Mortgage.

But the mortgage unit of Intercontinental Exchange narrowed its quarterly losses and touted the addition of several new customers this year in its earnings call.

The bond market–which dictates interest rates–had a generally favorable response to yesterday’s update from the Federal Reserve.  While the Fed didn’t cut rates, and while they’re increasingly acknowledging that rate cuts are moving farther into the future, they still think data will evolve in a way that results in the next move being a cut as opposed to a hike. Positive momentum continued today, in spite of several economic reports that argued the opposite case.  Had these reports been top tier market movers, the counterintuitive victory would have been highly unlikely. Friday is a different sort of day in terms of economic data.  The big monthly jobs report is in a league of its own when it comes to labor market data, and while it may not currently be the most important report on any given month, it’s a consistent 2nd place behind CPI.  After the jobs report, we’ll get a strong 2nd tier contender in the form of ISM’s service sector index.   These two reports have the power to accelerate or reverse the friendly tone seen in rates over the past 2 days.  As for today, the average lender inched just barely to the lowest levels since April 12th.  This wasn’t the case in the first half of the day, but as bonds improved, many lenders were able to issue mid-day reprices. 

Counterintuitive Rally And Asymmetric Risk

Bonds began the day in slightly stronger territory and managed to hold the gains after the early economic data which consisted of unfriendly readings in Challenger layoffs, Jobless Claims, and Q1 Unit Labor Costs.  All three spoke to ongoing labor market strength with the latter adding some inflationary fuel to the fire.  But the bond market is apparently tired of reacting to the alarming data from Q1 and March.  Instead, the perfect adherence to previously established technical levels (4.64 and 4.57 in terms of the 10yr) suggests intraday volatility was a factor of positioning and short-covering ahead of Friday’s jobs report.  There is some asymmetric risk potential on Friday considering how unfazed bonds seem to be by yet another unfriendly report (with the implication being a greater willingness to chase the bid on a downbeat jobs number). Just remember, the previous sentence tells us nothing about the direction of trading–only probable magnitude.

Econ Data / Events

Jobless Claims

208k vs 212k f’cast, 208k prev

Continued Claims

1774k vs 1800k f’cast, 1774k prev

Market Movement Recap

08:34 AM 10yr up from 4.592 overnight lows to 4.621 (still down 1.3bps on the day).  MBS are still up an eighth of a point, but down 2 ticks (.06) from the highs.

12:37 PM Some weakness into the 9am hour, but now at the best levels of the day.  10yr down 4bps at 4.593.  MBS up just over a quarter point.

03:18 PM Flat at best levels.  MBS up nearly 3/8ths and 10yr down 5.6bps at 4.578

Zillow Group Inc. shares fell after the real estate company published a second-quarter outlook that called for lower revenue in its core business and predicted stalling growth in the broader U.S. housing market.

Title insurers, whose activity is highly correlated to mortgage production, wrote $15.1 billion in premiums during 2023, down from $21 billion in 2022 and $26.2 billion for the year before that.