The 30-year fixed rate mortgage average resumed its climb that started in September, as the benchmark 10-year Treasury price still reflects views on inflation.

They may not be low.  In fact, they may still be a lot higher than you want, but at least they haven’t been too volatility this week.  For the 7th day in a row, the top tier, conventional 30yr fixed mortgage rate ended the day in the same narrow range between 7.01% and 7.08% for the average lender.  Today’s installment was one of the least eventful, with a modest drop from 7.05 to 7.04.  The relatively light day over day volatility in mortgage rates is a reflection of the same level of volatility in the underlying bond market.  Sure, there have been some fairly big intraday swings at times, but the bigger picture has been much flatter in November compared to October. The lower volatility in the bond market is fairly easy to reconcile with a lack of actionable economic data.  Today’s data COULD have been actionable, but it was mixed in its implications for growth.  If it had been much stronger or weaker than expected, rates could certainly have moved more meaningfully.   As it stands, the bond market and the mortgage rate watcher are both waiting for early December as the next time frame with truly massive risks of volatility.  Please note: this doesn’t mean we can’t see volatility between now and then!  Rather, the early December economic data simply carries the bigger risks of inspiring bigger rate movements.  As always, that requires a “for better or worse” qualifier, because volatility can go both ways.  It just hasn’t gone our way very much since mid September. 

Another Flat Day, This Time With Data

While it would be an overstatement to say that bonds have fully outgrown the phase of volatility that’s dominated October and early November, it’s not unfair to say that volatility has been subsiding rather markedly–especially if we focus on day over day closing levels.  8 out of the past 8 trading sessions have seen 10yr yields end the day in a 4.40 to 4.46 range–pretty narrow, even for a more boring economic and political backdrop. Today’s neutrality had at least something to do with the mixed messages in the econ data, but bonds are definitely waiting for the heavy hitting report of early December before making bigger bets.

Econ Data / Events

Jobless Claims

213k vs 220k f’cast, 219k prev

Continued Claims

1908k vs 1870k f’cast, 1872k prev

Philly Fed Index

-5.5 vs 8.0 f’cast 10.3 prev

Existing Home Sales

3.96m vs 3.93m f’cast, 3.83m prev

Market Movement Recap

10:24 AM Modestly stronger overnight and holding gains after data.  MBS up 3 ticks (.09) and 10yr down 2.2bps at 4.383

11:04 AM Off best levels now.  MBS up only 1 tick (.03) and 10yr now up 0.4bps at 4.409

03:27 PM MBS down 1 tick (.03) and 10yr up 2.4bps at 4.429

As you may have gleaned from our coverage of new home sales, construction, builder confidence, and mortgage apps recently, there are only so many ways to describe the same phenomenon.  Today’s report on October’s Existing Home Sales from the National Association of Realtors (NAR) is just another player on that same stage.  Like the others, it’s languishing at the lowest levels in a long time and cutting a broadly sideways path. Like the others, we can tie the big drop in 2022 to the big rate spike in 2022.  After the problematic time frame highlighted in the chart below, little has changed for sale or rates in the bigger picture.  This particular data series has one other interesting nuance and it has to do with inventory levels.  Existing home inventory has a very reliable pattern of peaking in the summer and bottoming out around the new year.  2023’s inventory peaked much later in the year and now this year, the peak has yet to show up! What should we make of this?  Are more people listing their homes or are fewer people buying the homes that are listed?  Turning to Redfin’s housing data center (which is not the same data set as the Existing Homes data, but may provide some insight), the suggestion is that the sales slowdown has more to do with the inventory building.  The chart below shows that 2024’s new listing levels closely match 2023’s up to this point in the year. Other highlights from this month’s NAR Existing Sales report:

This morning I head from Columbia, MO (“COMO”… big thumb’s up for Sophia’s Italian) to Kansas City for the KC MBA luncheon. I have seen very few Teslas on the road. “Bill Gates and Elon Musk should team-up and make a medicine to treat erectile dysfunction, and name it ElonGates.” Love him or hate him (Tesla has the highest fatal accident rate of all auto brands), Elon Musk may indeed impact residential lending in the United States, and not in terms of Federal workers being able to qualify for a loan. The position of Secretary of Treasury, normally confirmed by the Senate, has yet to be decided, but it is hard to find stories about the selection process by President-elect Trump without finding Musk involved. (Today’s podcast can be found here and this week’s is sponsored by PHH Mortgage. If you are looking for a Correspondent Lending partner or an experienced, award-winning subservicer who can manage your forward and reverse, residential and commercial, and performing and non-performing loans look no further than PHH. Hear an interview with CoreLogic’s Terri Davis on how customer retention technology is helping mortgage professionals to help grow their business and retain their current client base.) Lender and Broker Software, Services, and Products Now more than ever, mortgage lenders are investing in technology to drive efficiency across their business and deliver experiences that create customers for life. In this episode of the Fintech Hunting podcast, technology and industry experts dive into what you should be prioritizing in your product and pricing strategies. Tune in now to discover best practices for selecting the right PPE solution, tips for a successful implementation and how ICE is leveraging automation to help clients scale effectively.

It’s been a bit of a chaotic morning so far, but in a narrow enough range to make it relatively boring in the bigger picture.  Bonds began the day in slightly stronger territory and managed to improve a bit more after the 8:30am econ data.  Selling picked up mysteriously at 9am and buyers fought back at the 9:30am NYSE open.  After multiple lead changes, weaker momentum has prevailed since 10am and bonds are entering the 2nd half of the day in microscopically weaker territory. 

The friendly reaction to the data is impressive, given the state of jobless claims.  We continue to prefer comparing non-seasonally adjusted numbers to their comparable weeks from previous years.  In so doing, we find 2024 is doing about as well as any of the recent benchmark years.

The counterpoint to the jobless claims reactions continues to be the state of continuing claims which continue (yes, I said it 3 times in one sentence) to paint a less optimistic picture than initial claims. 

Critical defects increased for the second consecutive three-month period, with appraisal-related errors nearly doubling, Aces Quality Management said.

The Federal Housing Administration wants to make it easier for mortgage applicants to use rental income received from boarders in the underwriting process.

Vista Point Mortgage and Rockport Mortgage reported attacks on their systems, with over 14,000 customers potentially affected by compromised data.

In a congressional hearing, top officials from the Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency said no new rules will be adopted or proposed this year.