A Consumer Financial Protection Bureau “waives any alleged noncompliance” by the mortgage company while continuing to dole out redress to borrowers.

Refinance apps made up more than 40% of all mortgage applications last week, driving an uptick as consumers seek out cheaper mortgage payments.

The chairman and regulator of Fannie Mae and Freddie Mac pointed to Jermone Powell’s recent testimony about renovations to the Federal Reserve’s headquarters.

It’s a rare theft of trade secrets complaint by the industry leader, which stayed out of the spate of litigation between competitors during the refinance boom.

Bonds Circle The Wagons Ahead of High Risk NFP

The consensus for tomorrow’s NFP (nonfarm payrolls, the principal component of the big jobs report) is 110k–not much of a downgrade from last month’s 139k.  The bond market has recently been trading as if it expects to see an even lower number–a fact that’s not too surprising given the preponderance of other data that suggests a weaker labor market in June. The latest in that list was today’s ADP employment report which completely whiffed (-35k vs 95k f’cast). Bonds initially rallied on that news, but didn’t maintain the gains, possibly due to all of the preemptive rallying already in place over the past 2 weeks, and possibly because ADP is notorious for paradoxically diverging from NFP on any given month despite broad long-term correlation. Today’s weakness was minimal in the bigger picture and could just as easily be viewed as part of a 2-day process of circling the wagons (pausing and modestly correcting a prevailing trend on the eve of high-consequence data).

Econ Data / Events

ADP Employment

-33k vs 95k f’cast, 29k prev

Market Movement Recap

08:27 AM slightly weaker overnight  but erasing losses after ADP data–at least in the shorter end of the yield curve.  MBS now unchanged.  10yr up 4bps at 4.279, but 2yr is down 1.7bps.

09:15 AM Back down to weaker levels.  MBS down 5 ticks (.16) and 10yr up 5.3bps at 4.292

12:46 PM Holding at 5 ticks (.16) weaker in MBS.  10yr now up 6.4bps at 4.303

03:10 PM Off the weakest levels in Treasuries with 10yr now up only 4.8bps at 4.288.  MBS down an eighth.

Mortgage rates have generally been falling since May 21st and have done nothing but move lower for more than 2 weeks.  That winning streak finally came to an end today with the average lender moving up 0.06% for a top tier 30yr fixed quote. While that’s a moderately big jump for a single day, if we remove the past 4 days from the equation, today’s rates would still be the lowest since early April.  In other words, we’re still in solid shape in the bigger picture. Additionally, we’ve increasingly expected rates to bounce as the recent winning streak persisted. As of yesterday, it was up to 11 days and the odds of a bounce rise sharply after about 5-8 days.  Last but not least, it’s also not uncommon for rates to “circle the wagons,” so to speak, if they’re in the midst of a sustained trend on the eve of a critical market event. Tomorrow’s jobs report classifies as such an event.  Along with the Inflation data coming out on July 15th, this data has the potential to firmly support or reject the notion that the Fed could cut rates as early as this month. While we often go out of our way to remind our audience that the Fed Funds Rate doesn’t dictate mortgage rates, a lot of that has to do with timing.  Changes in Fed Funds Rate expectations almost always correlate quite well with mortgage rate movement, and this data could absolutely change those expectations. As with any big ticket economic report, there’s no way to know how it will fare versus the consensus ahead of time because that consensus constantly adjusts for all available info. In other words, if other reports suggest a weaker labor market, forecasters will update their forecasts and traders will take a lead-off in the corresponding direction.  Bottom line: all we can know is that potential volatility is high tomorrow (Thursday) morning, for better or worse. 

“Pro Tip: Here’s a friendly 4th of July reminder that absolutely no one is going to watch the videos of the fireworks you record on your phone.” You can bet anyone flying some place is watching the flight delays due to staffing and weather. You can bet that people are watching home price appreciation, especially in terms of home equity, HELOCs, and cash-out refinancing. Expect home price appreciation to slow (which isn’t necessarily a bad thing) due to increased supply, steady interest rates, and weaker economic conditions. (No one wants to go back to the 20 percent gains we saw in 2020 and 2021.) The Fannie Mae Home Price Expectations Survey forecasts average home price growth of 2.9% in 2025 and 2.8% in 2026. Zillow projects a 0.7% decline in U.S. home prices between May 2025 and May 2026 due to increased housing inventory. The Mortgage Bankers Association expects home prices to rise by 1.3% in 2025, followed by a 0.3% increase in 2026 and 2027. (Today’s podcast can be found here and this week’s is sponsored by Figure, which is shaking up the lending world with their five-day HELOC, offering borrower approvals in as little as five minutes and funding in five days. Figure has hundreds of partners in the banking, CU, home improvement, and (of course) IMB space embedding their technology, giving borrowers an experience they will rave about. Today’s has an interview with Halcyon’s Kirk Donaldson on the question, “Why is it so expensive to originate a mortgage?” as well as an exploration of how automation, compensation models, regulatory burdens, and tech interoperability could reshape costs and lead to a more efficient future.)

ADP employment was this morning’s key economic report and it came out sharply weaker than expected (-33k vs 95k f’cast). There are many past examples of a “miss” of this size prompting a swift rally on the bond market.  Although that looked like it could have been in the works in the first few minutes, bonds have since reversed course and moved back in line with weaker overnight levels.  What’s up with that? To some extent, global bond markets are experiencing some pressure from a massive rout in UK debt over fiscal spending fears.  Then there’s the simple fact that ADP has such a hit and miss track record when it comes to predicting NFP. Recently, ADP has drifted much lower without NFP following suit.

Pricey insurance, expensive maintenance, and struggles with financing are all weighing down the condo market, with Florida and Texas feeling it the most.

The National Credit Union Administration, operating with just one board member, has liquidated two credit unions that were recently put into conservatorship. The failures are the first credit union failures since Democrats on the board were fired, leaving Republican Chair Kyle Hauptman.