Mortgage application activity drifted lower again last week , the third straight week of mostly fractional declines. The Mortgage Bankers Association’s Market Composite Index, a measure of application volume, decreased 0.6 percent on a seasonally adjusted basis from one week earlier and 0.1 percent before adjustment. The Refinance Index declined by 2.0 percent from the previous week and was 5.0 percent lower than the same week one year ago. The refinance share of mortgage activity slipped to 30.3 percent from 30.8 percent the previous week. [refiappschart] The seasonally adjusted Purchase Index ticked down by 0.1 percent week over week but did move 1.0 percent higher on an unadjusted basis. Purchase activity was 13.0 percent lower than during the same week in 2023.    [purchaseappschart] “Mortgage rates moved lower last week, but that did little to ignite overall mortgage application activity. The 30-year fixed mortgage rate declined slightly to 6.91 percent, while the 15-year fixed-rate decreased to its lowest level in two months at 6.35 percent,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Elevated mortgage rates continued to weigh down on home buying. Purchase applications were unchanged overall, although FHA purchases did pick up slightly over the week. Refinance applications decreased to fall 5 percent below last year’s pace.”  Other Highlights from MBA’s Weekly Mortgage Application Survey

JPMorgan Chase & Co.’s latest client survey showed that outright short positions in US Treasuries rose to the most since the start of the year in the week leading up to April 1.

But the pace of home price growth between January and February was nearly double the level seen prior to the pandemic.

Despite advancements in AI for transaction monitoring, financial institutions share little in the way of fraud data, undermining efforts to combat crimes including check fraud.

With high deposit and borrowing costs persisting amid the Federal Reserve’s campaign against inflation, lenders face stress on their net interest margins and the potential of troubled loans ticking up.

Dean Wheeler will drive the firm’s growth push in the U.S. and follows the London firm promoting Serenity Morley to COO, to drive growth globally.

Technical Breakout in Treasuries. Does it Matter?

Bonds began the day in much weaker territory as Treasuries followed European yields higher after a series of stronger PMIs overnight. Domestic traders added to the weakness early with 10yr yields hitting their highest levels since November.  Bonds found their footing after an as-expected JOLTS report and MBS even made it all the way back to “unchanged” just before 3pm.  Nevertheless, 10yr yields had broken their recent 4.32% ceiling.  As always technical levels don’t predict the future.  This breakout reinforces the headwinds of the past few weeks and acknowledges the risks associated with the incoming data.  If that data is friendly, this will not look like an important technical breakout in hindsight.  But the opposite is also true: stronger data would make this breakout look like ominous foreshadowing.

Econ Data / Events

Job Openings

8.756m vs 8.75m f’cast, 8.748m prev

Market Movement Recap

08:52 AM 10yr yields up 7.8bps at 4.394. MBS are down just over a quarter of a point.

11:12 AM Pushing back after uneventful JOLTS.  MBS down only an eighth.  10yr up 4.5bps at 4.361.

01:51 PM Sideways to slightly stronger.  MBS down only 2 ticks (.06) and 10yr up 4.3bps at 4.359

02:30 PM MBS turn green, now up 1 tick (.03).  10yr still up 4.4bs at 4.36, but 5yr Treasury now unchanged as well.

After starting the week with a fairly large jump, mortgage rates had a much calmer day on Tuesday.  This was made all the more impressive by the fact that the underlying bond market suggested another increase earlier this morning. To be fair, the average mortgage lender was definitely showing noticeably higher rates this morning, but many lenders were able to offer improvements over the course of the day as the bond market made progress back toward unchanged levels.  Bonds and rates are taking their primary cues from economic data these days and this week is active in terms of new economic reports.  Today’s job openings data happened to be a non-issue, but only because it came in almost perfectly in line with forecasts. Tomorrow brings an important index that measures growth in the services sector that could set the tone for rate momentum heading into Friday’s even more important jobs report.

“I think it’s disgraceful that after 55 years, people don’t know who Neil Armstrong was… or even the type of trumpet he played.” Time flies. Did you know that Freddie Mac and Fannie Mae have their driver’s permits? I am kidding about the permit, but it has been 16 years since they were placed under conservatorship, under the FHFA. Of course, no regulator ever wants their job to go away, so it is doubtful that the FHFA will be an active proponent of “releasing them into the wild.” Besides, their focus has, in recent years, shifted to first-time home buyers and previously underserved markets. While we’re on the passing of the years, at a recent TMC session on leadership, First Community’s Keith Canter reminded everyone that it was four years ago that managers and companies sent everyone home due to the pandemic. Companies couldn’t hire fast enough. Two years later rates moved higher, and managers were dealing with layoffs. Since, management teams have been focused on what is working, what is not working, and what employees need from their supervisors. It is a good exercise to partake in several times a year. (Found here, this week’s podcasts are sponsored by Loan Vision. With Loan Vision, the mortgage banking industry’s premier mortgage accounting solution, you can take your accounting department from “cost center” to “revenue generator,” operating more efficiently and profitably. Hear an interview with Loan Vision’s Paul Loftus on the competitive landscape of the mortgage market and strategic direction of the mortgage accounting space.)

Bonds came into the domestic trading day with additional losses.  This wasn’t a foregone conclusion, but it was a distinct possibility based on past examples of big directional moves on the first trading day of the month. We knew European bonds would be opening in weaker territory and that it wasn’t likely to impact U.S. bonds, but Europe went on to lose even more ground after PMI data and that weakness pushed U.S. yields higher overnight.  Selling stalled just before 9am and we’ve been bouncing back a bit since the tame JOLTS release.