Reversing a year-ago trend, the U.S. economy and plateauing interest rates led to credit tightening in September, the Mortgage Bankers Association said.

The settlement pending a judge’s approval would end the lawsuit over a hack last December.

Uneventful Day, But That’s a Victory These Days

Last week’s bond market action offered some glimmers of hope that the most recent jobs report wouldn’t cause ongoing momentum toward higher rates, but yields nonetheless hit their highest levels on Thu/Fri.  Today is a victory in that context as bonds moved back into the lower half of last week’s trading range and all without any major market movers in play.  To be fair to the NY Fed Manufacturing index, it was a market mover and it did help set a rate-friendly tone out of the gate.  That said, the move looked more like a yield curve adjustment as opposed to a widespread bond rally (i.e. 30yr yields dropped 9bps while 2yr yields were basically unchanged).   Thursday AM’s data is higher consequence. 

Econ Data / Events

NY Fed Manufacturing

 -11.90 vs 3.8 f’cast 11.5 prev

Market Movement Recap

08:34 AM Moderately stronger overnight with a slight additional improvement after data.  MBS up an eighth.  10yr down 4.1bps at 4.059

11:32 AM Holding near best levels in Treasuries (most gains in longer durations).  10yr down 5.7bps at 4.044.  MBS up 5 ticks (.16).

02:13 PM MBS still up an eighth, but down 3 ticks (.09) from AM highs.  10yr down 6.5bps at 4.036

04:15 PM Heading out at essentially the same levels as the previous update.  MBS up an eighth and 10yr down 6.7bps at 4.035

The Fed’s cut has implications for mortgage companies’ costs and the lineup of providers keeps fluctuating.

The megabank’s scale hasn’t made it immune from the deposit wars that have crimped bank profits. But the “stabilization” that Wells Fargo flagged is a positive sign as other banks start reporting earnings.

While people are talking about supply, the former National Association of Realtors exec adds more attention must also be given to home insurance affordability.

With two major disasters striking the U.S. within weeks, awareness of insurance challenges many homeowners encounter is coming to the fore, and servicers find themselves caught in the middle.

The megabank reported a big increase in credit costs for the third quarter, which included a reserve build of $1 billion.

Preparing for the next hurricane in Florida? Or Louisiana? Or Texas? Call this really smart or really humorous, it’s up to you. (And no, I don’t know how it fared.) We do, however, know how lenders and vendors are faring. Sure, headlines blared that rates were going down, but as we all know they went up after the Fed’s 50 basis point cut a few weeks ago, and locks have not shot up much, if at all. Looking at September, according to Curinos’ new proprietary application index, refinances increased 62% in September; the purchase index increased 21% for September as a whole. September 2024 funded mortgage volume increased 21% YoY and decreased 3% MoM. The average 30-year conforming retail funded rate in September 2024 was 6.45, 30bps lower than August 2024 and 53bps lower than the same month last year. Purchase rates were 33bps lower MoM and 67bps lower YoY, while Refinance rates were 29bps lower MoM and 48bps lower YoY. Curinos sources a statistically significant data set directly from lenders to produce these benchmark figures. (Today’s podcast is found here and this week’s is sponsored by LoanCare. The mortgage subservicer is known for delivering superior customer experience through personalization and convenience. LoanCare is part of Fidelity National Financial, a Fortune 500 company and leading provider of services to real estate and mortgage industries. Hear an interview with Figure’s Michael Tannenbaum on how borrowers are paying down debt and the ways in which his company is utilizing OpenAI GPT.)

While this week’s rates were substantially higher than most of last week’s, if we remove a few flashes of volatility,  the average lender stayed very close to Monday morning’s levels.  Wednesday afternoon and Thursday mid-day definitely saw multiple negative reprices, but in each case, the bond market recovered enough to limit the volatility.  Compared to last week, it may as well have been a flat line. The following chart shows the mortgage backed securities (MBS) prices that directly dictate mortgage rate movement.  Higher prices = lower rates and vice versa. Today’s economic data included a wholesale inflation report that has occasionally caused some volatility, but today’s installment was not one of them.  The bond market improved a bit heading into the afternoon and traded calmly from there.  As such, mortgage lenders were not compelled to make any negative mid-day changes after setting this morning’s rates very close to yesterday’s latest levels.  The next time lenders have a chance to set mortgage rates for the day will be Tuesday due to the market closure on Monday for Indigenous Peoples’ Day.