What’s old is new again? In Vermont, one man is refurbishing payphones for people to use for free. Very cool. Debt isn’t old or new, but how we treat it is. On today’s episode of Advisory Angle at 2PM ET, STRATMOR experts Garth Graham, Nicole Yung, and Sue Woodard explore how home equity fits into today’s mortgage landscape. With refinancing largely on hold in a high-rate environment, home equity products are giving lenders, and their borrowers, important new options. The team looks at where the opportunities are right now. Reported numbers vary somewhat, but there are roughly 6 million delinquent student loans. The Treasury & Department of Education are allegedly going to start garnishing wages in October. That impacts mortgages how? 35-40 percent of GNMA borrowers have student loans, and HUD’s guide states no loan modifications if a borrower is delinquent on their student loans. So if a lender is trying to help a client, not only are they dealing with mounting homeowner insurance costs ($500-1,000 a month), but if their wages are being garnished ($500 a month) then what does that do to both their ability to qualify and their delinquencies in other consumer debt categories? (Today’s podcast can be found here and this week is sponsored by Gallus Insights. Mortgage KPIs, automated, at your fingertips. Gallus allows you to turn data from your various databases and systems into automated business intelligence and actionable insights. Hear an interview with Elysian Fields’ Jordan Higgins on how intentional micro-wellness can combat burnout, boost focus, and bring accessible, joyful wellness to today’s screen-heavy workplaces.)

The Tuesday after Labor Day can have a mind of its own when it comes to financial markets–especially if it also happens to be the trading day of the month. Last week’s month-end trading environment gave bonds an artificial, temporary boost and some of this morning’s weakness could simply be due to the type of reversal often seen at the start of a new month. On more specific notes, EU inflation came in higher than expected and bond yields in several EU countries are at long-term highs (UK yields highest since 1998!). Despite thin trading conditions forex clearly showed a surge at the 3am EU open.

There is also the matter of a lower court ruling on the legality of tariffs. There’s some speculation that this could result in tariffs needing to be paid back–something that would definitely hurt the bond market as it would imply additional Treasury issuance. We think it’s far too soon to jump to such conclusions and while it could have a bearing on some early trading decisions, it wouldn’t be a thematic driver until far more clarity is achieved several months down the road.  Either way, damage is limited in the U.S., but still apparent with 10yr yields starting the day roughly 7bps higher. Weaker ISM Manufacturing data is helping erase some of the overnight losses, thus making a somewhat alarming morning only slightly unpleasant. 

The D.C. District Court held a hearing this morning and defendants filed briefs in a case to determine whether Federal Reserve Gov. Lisa Cook will remain on the Federal Reserve Board after her ostensible firing by President Trump earlier this week. No ruling was issued, but one is expected before the FOMC votes in mid-September.

Most big banks saw modest reductions in their requirements following this year’s stress tests. The results come as the Fed prepares to smooth year-to-year swings with a new averaging rule.

The new AD Home portal helps the company’s mortgage brokers’ business by giving their customers a more intuitive, online technology to manage their loans.

Mortgage lenders with servicing operations will have more access to automation that cancels surety bonds soon and will need a new registration to accommodate it.

US Treasuries retained most of their recent gains as anticipation of Federal Reserve interest rate cuts held firm after the central bank’s preferred gauge of inflation matched economist estimates.

Housing regulator Bill Pulte lodged more fraud allegations against Fed Governor Lisa Cook as she filed a temporary restraining order regarding attempts to remove her.

The lawsuit accuses Village Capital of failing to pay full price for servicing assets and refusing to reimburse Change for a large Ginnie Mae payment.

It was a very slow and steady week for mortgage rates. On all 5 days, the average top tier 30yr fixed rate moved by 0.02% or less.  This is a small enough change that the average borrower wouldn’t see any detectable difference in a loan quote from one day to the next. But due to most of the changes being toward lower rates, Thursday and Friday would be modestly but measurably better than the first 3 days of the week. This is an ideal scenario for prospective borrower and mortgage professionals. One of the most frustrating and challenging realities of this industry is the extent to which rates can change over short periods of time. So not only did we enjoy the lowest rates in more than 10 months, but volatility was essentially non-existent to boot! It’s not a huge surprise to see this sort of stability given that there were no big-ticket risks on the event calendar this week. That changes in a major way in the week ahead. Right from the outset on Tuesday (Monday is a Federal holiday), there are relevant economic reports on all 4 days. Friday’s jobs report is especially important considering it was the last jobs report that was primarily responsible for the recent rally to 10-month lows. Bottom line: to whatever extent it was unlikely that the outgoing week would see much volatility, the forthcoming week is likely to be just the opposite, for better or worse.