Housing was chugging right along in early 2020, then covid happened.  Housing experienced lots of unexpected volatility with the most important development being a huge increase in demand and prices… at first. Once rates began skyrocketing (relatively) and the frenzy began to subside, home sales numbers tanked to the weakest levels since the Great Financial Crisis by the end of 2022. They’ve been drifting and bouncing around near those same levels ever since. Bigger picture for context: In other words, this data series isn’t worth too much discussion until it exits this holding pattern. For those determined to pick out potentially interesting anecdotes, feel free to sort through the following:
Prices rose 3.0% year over year.  It’s the 15th straight month of increases
Inventory has been growing faster than sales have been falling
First time buyers accounted for 26% of total, matching the all-time low, but not a crazy drop from 2023’s average of 32%
All cash sales accounted for 30%, up from 26% last month.

“The coast is clear,” and today I head to the Palm Beach Mortgage Professionals Expo hosted by FAMP’s Broward-Gold Coast Chapter. Legal issues will be one topic of focus, and today’s Lender’s One call features Ari Karen of Mitchell Sandler. Florida has been battered, and it is a good time to hear what Verisk’s Kingsley Greenland has to say about climate risk, disaster modeling, and homeowners insurance on the Big Picture call tomorrow. On top of that, every lender out there has realized that there’s $36 trillion of home equity and $1.1 trillion of credit card debt. There’s gotta be an opportunity for loan originators somewhere, right? The current STRATMOR blog is titled, “Help Borrowers Tap Into $36 trillion Available in Home Equity.” Lenders know that refinancing is not purely a numbers game, something that seems lost on the mainstream press. Life events occur, changes happen, families evolve, and loans pay off. And credit card debt is much more expensive than mortgage debt. (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 Jake Perkins on his build of the new Chrisman Commentary website and how both it and the new media offerings are adding value to mortgage industry participants..)

A ban on screen scraping and new disclosures to consumers about data usage are among the new elements of the data protection rule.

The correspondent giant says it has over 4,400 approved brokers, and technology rivaling channel leaders Rocket Pro TPO and United Wholesale Mortgage.

The economy and the environment are impacting loan entries into forbearance, as well as their performance on exit, the Mortgage Bankers Association said.

At the Most Powerful Women in Banking conference this week, New York’s top banking regulator said banks need to take full responsibility for the artificial intelligence models they use, even if they bought them from a third party.

A pair of mortgage technology providers are bringing out tools to increase customer retention rates among servicers and originators.

“An eye for an eye, Tooth for a tooth. Vote for me and I’ll set you free! Rap on, brother, rap on. Well, the only person talking about loving thy brother is the preacher. And it seems nobody’s interested in learning, but the teacher. Segregation, demonstration, integration, determination, aggravation, humiliation, obligation to our nation.” So sang The Temptations in “Ball of Confusion” from 1970. (Yes, 54 years ago.) Politics aside, some in our industry were confused when rates went up instead of down after the last Federal Reserve meeting, but face it, there has been a lot of positive economic news recently that has kept long term rates higher. The Fed can only control so much: Extreme weather across southern Asia has sent the price of black tea sharply upward, with the benchmark auction price of tea in northern India coming in up 30 percent year over year. Beyond heavy rains in June that hurt the harvest, a fungus has been afflicting India’s tea plantations. Harvests in Sri Lanka are likewise down, and the export markets are going to suffer the most: Japan, for instance, gets 60 percent of its black tea imports from India and Sri Lanka. (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 nCino’s Ben Miller on a topic that’s dominating industry conversations right now: artificial intelligence and machine learning.)

Mortgage rates jumped to their highest levels since late July yesterday.  Underlying market movement wasn’t readily attributable to any singular headline or economic report.  Leading theories involve changes in election odds and more esoteric aspects of the bond market’s plumbing. The damage was much easier to quantify as it resulted in one of the bigger single day jumps seen in 2024 and certainly the biggest jump that occurred in the absence of an immediately obvious, quantifiable reason.   Today was much calmer although the average lender dialed rates up just a hair more. The day over day change was a modest 0.03%, bringing the average 30yr fixed rate up to 6.85% on top tier scenarios.   In general, it’s a good idea to plan for additional rate volatility through the first half of November at the very least.  

Much Calmer, But Risks Remain

Bonds had a significantly calmer day in terms of day-over-day change.  In fact, by the 3pm close, both MBS and Treasuries were close enough to unchanged.  There was a bit of intraday volatility that saw bonds attempt to stage a little rally only to give it all up by the noon hour–the latest reminder that we’re dealing with some asymmetric risks over the next few weeks.  

Econ Data / Events

Housing Starts

1.354m vs 1.350m f’cast, 1.356m prev

Building Permits

1.428m vs 1.46m f’cast, 1.47m prev

Market Movement Recap

09:14 AM Initially weaker overnight, but back into positive territory by the open.  10yr down 2.2bps at 4.18 and 5.5 UMBS up 3 ticks (.09).

11:22 AM Back to weakest levels.  MBS unchanged and 10yr nearly unchanged at 4.199.

01:07 PM Worst levels just after noon, but bouncing back a bit now.  MBS up 1 tick (.03).  10yr unchanged at 4.202.

03:44 PM Drifting sideways since last update.  MBS up 1 tick (.03) and 10yr down 0.4bps at 4.198