The last time I was in Florida I saw a bumper sticker that said, “I thought growing old would take longer.” This weekend I return to the Sunshine State (the MBAF’s Eastern Secondary is coming up), and I mention this because the state is the epicenter of HOA fee escalations, hurricane damage, and insurance woes. But wait! An analysis based on examination of the 45 insurers responsible for personal property insurance in Florida sees the state pulling out of its spiral after eight brutal years of losses. The personal property insurance industry reported an underwriting gain of $207 million in 2024, a big turnaround from the $174 million underwriting loss in 2023, due in large part to a legislative reform that made it somewhat more palatable to do business but an expensive one, as direct premiums reached $11 billion in 2024, more than double the $5 billion seen in 2020. (Today’s podcast can be found here and this week’s is sponsored by CreditXpert, the credit optimization platform that helps today’s top mortgage originators and more than 60,000 mortgage professionals qualify more applicants, make more competitive offers, reduce LLPA premiums, and close more loans. Today’s has an interview with Rob Chrisman on how the mixed messages from the Trump administration about the future of the GSEs are impacting those in the mortgage industry.) Products, Software, and Services for Lenders The average American homeowner has access to a significant source of funds in their home’s equity, and March 2025 ICE Mortgage Monitor data shows that they are finally starting to tap into it. Retention and recapture remain a heavy focus for lenders as the market continues to shift, and with the right tools, home equity can provide an opportunity to develop stickier relationships with customers. But it goes beyond simply offering customers home equity products; it’s about providing them with a convenient equity application, valuation and lending process through powerful digital tools. Read the latest blog to learn how ICE is helping lenders unlock new opportunities in home equity lending.

Bonds began the morning in rally mode, even if not in an extreme way.  Gains lasted for about 20 minutes before reversing.  The shift was accompanied by slightly elevated volume, indicating a genuine underlying motivation. Fortunately, there are two good candidates to choose from.  Unfortunately, it’s hard to assign an exact amount of blame/credit to each of them. Based on stock market volatility, the Trump/Xi call is definitely on the radar. Stocks surged on the announcement, and then tanked when the call ended without any additional headlines. The ECB announcement also got attention based on the reaction in the Euro and EU yields.  The net effect has been a return to roughly unchanged levels for Treasuries and MBS.  

The Senate voted to confirm Federal Reserve Gov. Michelle Bowman’s nomination to be the vice chair for supervision at the central bank in a 48-46 party-line vote.

The first-of-its-kind growth restriction established a new precedent for how regulators can address a broken bank culture. With scant information about why the cap was lifted, the action provides little clarity on what Wells did right — or what the Fed did wrong.

Industry representatives indicated changes to the requirements that give servicers more leeway would be helpful to more moderate-sized companies in particular.

Closed-end home equity volume was up 13% year-over-year in the fourth quarter, outpacing HELOCs originations, which only grew 8%, TransUnion reported.

Two- to 10-year yields reached the lowest levels since at least May 9 after the ISM Services gauge for last month signaled contraction for the first time since last June.

Big Bond Rally After ADP and ISM

We knew the onus was on weaker economic data to justify any decent drop in rates/yields and we know the first week of any given month has a high concentration of relevant reports and that today’s slate is 2nd only to NFP day. Today’s heavy hitters included ADP Employment and ISM Services.  Both were weak–especially ADP. The employment component of the ISM report actually improved and that serves as a reminder that data doesn’t always agree–especially if the sample size is a single month. If Friday’s jobs report agrees with ADP, there’s more room for improvement for rates.  If NFP does like ISM’s employment index and rises slightly from last month, bonds will likely have to give back some of today’s gains. Future musings aside, it’s nice to see the market is willing to do what it’s supposed to do with this type of data. 

Econ Data / Events

ADP Employment

37k vs 115k f’cast, 62k prev

ISM Services

49.9 vs  52.0 f’cast, 51.6 prev

ISM Prices

68.7 vs 65.1 prev

ISM Employment

50.7 vs 49.0 prev

Market Movement Recap

08:26 AM stronger after ADP. MBS are up an eighth of a point and 10yr yields are down 4.6bps at 4.418.

10:37 AM Additional gains after ISM data.  MBS up 10 ticks (.31) and 10yr down 8.3bps at 4.383

03:07 PM Giving up some ground but mostly sideways after additional gains.  MBS up more than 3/8ths and 10yr down 10.3bps at 4.362

Whether or not today’s drop in rates is meaningful depends on one’s perspective, but in the context of recent rate movement, it’s definitely noticeable.  The simplest way to think about the improvement is as follows: the average lender is now about an eighth of a percent lower in just over a week. If we want to be more specific, today’s average top tier 30yr fixed rate is down to 6.87% from 6.96% yesterday, making it the best single day drop since mid April.  The same rate was 7.08% exactly 2 weeks ago.   Mortgage lenders tend to offer rates in eighth point increments.  When the average was at 7.08%, the prevailing rate quote would have been 7.125%.  Today it would 6.875%, or a 0.25% improvement. This would drop the payment on a $400k mortgage by roughly $67/mo. As far as motivations for today’s larger gains, it all comes down to economic data (which is really the only game in town if we hope to see further improvement). The eternal trade off of the relationship between data and rates is that the economy must weaken in order for rates to drop. Today’s data featured a sharply weaker reading in the labor market from ADP as well as a the lowest reading in nearly a year on a key service sector gauge.   Tomorrow is the least consequential day of the week in terms of economic data, but Friday brings the most significant data of the week in the form of the big jobs report. If it corroborates the message of today’s data, rates could continue lower, but it’s important to note that there are many past examples of the jobs report being wildly different from the data that comes out earlier the same week. 

As the world is watching the chicks learn to fly on the eagle cam, in the human world there are more “For Sale” signs. You know that problem we’ve had with inventory for years? Although all real estate is local, perhaps the inventory issue is over: U.S. home sellers are sitting on nearly $700 billion worth of listings, an all-time high. In addition, the U.S. housing market has nearly 500,000 more sellers than buyers, the most on record. You can guess the impact on home prices if it plays out. Keeping on with stats, the NAR Chief Economist Lawrence Yun said existing home sales will increase by 6% in 2025 and by 11% in 2026 during the “Residential Economic Issues & Trends Forum” at the NAR 2025 REALTORS® Legislative Meetings. Yun forecasted that new-home sales will rise by 10% in 2025 and by 5% in 2026, the median home price will climb by 3% in 2025 and by 4% in 2026 and that mortgage rates will average 6.4% in the second half of 2025 and 6.1% in 2026. “The housing market remains very difficult at the moment… Part of the delay in recovery is because the Federal Reserve has changed its outlook and appears to be on pause for a longer period.” (Today’s podcast can be found here and this week’s is sponsored by CreditXpert, the credit optimization platform that helps today’s top mortgage originators and more than 60,000 mortgage professionals qualify more applicants, make more competitive offers, reduce LLPA premiums, and close more loans. Hear an interview with Partners Credit’s Tracey King on the evolving conversation around credit costs, what lenders should understand about FICO’s role, and how early credit data signals provide a valuable lens into future market activity.)