Thursday morning brought the week’s only arguably important economic data in the form of Jobless Claims and S&P’s PMIs.  Both have a decent track record of inspiring small but noticeable reactions.  Today is no exception.  Unfortunately for rates, the data was stronger and the reaction was logical.  Fortunately, there was enough of an improvement overnight to soak up the weakness.  Heading into the 10am hour, bonds are still clinging to modest gains. 

Were solid, rounded airplane windows considered “innovation”? Indiana’s Carol K. has the answer. There’s always innovation, in this case entertaining. As Finigree, which some use for interim servicing ACH payments, is rumored to be winding down operations, companies are searching for solid, innovative companies to handle borrower’s money. Here at the FAMP’s Palm Beach Mortgage Professionals Expo, smart innovation is a topic, with lenders and vendors adding smart technology to their “tech stacks.” There are overtones of politics, and interest rates are also a topic. Though mortgage rates dropped leading up to last month’s Federal Reserve meeting, they’re up this month. Data has shown that the economy remains surprisingly resilient, the consumer is spending (albeit using credit cards), housing prices continue to motor along, and unemployment is stable and relatively low. Last month, the U.S. economy added way more jobs than expected and the unemployment rate ticked down. Strength means that the Fed is in no rush to lower rates. (Today’s podcast can be found here, and this week’s is sponsored by nCino, makers of the nCino Mortgage Suite for the modern mortgage lender. nCino Mortgage Suite’s three core products, nCino Mortgage, nCino Incentive Compensation, and nCino Mortgage Analytics, unite the people, systems, and stages of the mortgage process. Hear an interview with LodeStar’s Jim Paolino on the advantages of public vendor pricing and how attendees can connect, and maybe even party, at the MBA Annual next week.)

Consumer Financial Protection Bureau Director Rohit Chopra said opposition to the bureau’s recently finalized open banking rule should be viewed as banks and other large firms attempting to quash competition and stymie consumer data protection.

The new chair of the Basel Committee on Banking Supervision called for member nations to finish the job of implementing post-financial crisis regulations. He also warned them not to put economic goals over safety considerations.

The deal announced on Wednesday seeks to stabilize Boston’s tax system, which relies heavily on commercial property revenue and has been thrown off balance by the slump in office demand.

The company’s earnings looked more favorable when adjusted for the one-time charge, and it reported record levels of liquidity during the quarter.

While recent homeowners overwhelmingly support digital innovation that leads to faster, streamlined transactions, AI is “still not a trusted system for many borrowers,” Cloudvirga said.

Mortgage rates have been moving two directions recently and both of them are “up.”  Only the pace changes.  Today’s pace was modest to moderate, but because we were already at the highest levels since late July, the same is obviously true for today. There were no standout market movers in play today on the economic calendar.  The bond market (which dictates rates) has simply been engaged in an ongoing attempt to move toward higher rates amid a variety of potential threats in the coming days and weeks.  To whatever extent these threats don’t materialize, there would be room for rates to recover. Threats include election-related volatility, key economic data, and the Fed’s next policy announcement. Average 30yr fixed rates quickly find themselves back near 7%.  Our index is at 6.92%, which means a majority of lenders are offering either 6.875% or 7.0%.  As always, remember that this is a broad, top tier index rate and that actual, individual scenarios can be vastly different depending on the details. 

Why Would Rates Care About a One-Party Sweep?

Our morning commentary resulted in widespread questions regarding the “red sweep” being associated with higher rates.  Half of those were born of genuine curiosity.  Half were incredulous.  As ever, our goal is to convey what’s moving markets and why, and it would be nearly impossible for anyone to be less interested in bringing politics into that endeavor, but alas, sometimes it’s a thing.  Today’s recap video has a thorough analysis of the topic and should help clear up any questions created by the AM commentary.  

Econ Data / Events

MBA Refi App Index

672.6 vs 734.6 prev

Existing Home Sales

3.84m vs 3.90m f’cast, 3.88m prev

Market Movement Recap

08:50 AM Moderately weaker overnight.  10yr up 3.3bps at 4.243 and MBS down an eighth.

12:18 PM Additional losses into 10am and bouncing back a bit now.  MBS down an eighth and 10yr up 1.6bps at 4.226

01:56 PM Back near weakest levels with MBS down nearly a quarter point and 10yr up 4bps at 4.25

The Mortgage Bankers Association (MBA) keeps track of applications for purchase and refi mortgages every week.  Purchase apps are slower moving, less responsive to rates, and generally bouncing along the lowest levels in more than 20 years since the end of 2023.  As such, we’ll forget about them and move on to refi applications which have been far more interesting. This week’s index fell to 672.6 from 734.6 last week.  That’s a big drop and it follows several other big drops, largely undoing the surge seen after the recent rate rally.   But everything is relative.  The chart above leaves us with the impression of a big crash following a big surge.  If either move looks big, it’s only because the baseline of the past 2 years has been the lowest, flattest pace seen in refi apps since 1999-2000.  In the bigger picture, it was a barely noticeable uptick that has fallen back to the muted trend. The small uptick was unsurprising given that a vast majority of loans still had rates substantially lower than the lowest lows of the past few months.  The correction back to lower levels is unsurprising given that rates have quickly surged back to the late July highs.  As such, don’t be surprised to see another reasonably big downtick next week. [thirtyyearmortgagerates]