The new tool, dubbed Araya, utilizes data available in several of the technology firm’s lines of business, including its climate risk division.

While rate-and-term refinance locks boomed, the rise in purchases also was telling as it was the first since the Fed started raising rates, Optimal Blue said.

Home prices are one driver. Other factors also have been exerting upward pressure on housing expenses that differ by region and lift the overall average.

Europe’s top finance ministers are questioning the U.S.’s commitment to the global capital standards. The mistrust could have consequences for international regulatory efforts.

Worst is Over. Now What?

Good things happened in the bond market on Tuesday.  There was a bit of a scare in the AM hours as a relatively flat overnight performance gave way to some early weakness, but buyers showed up at the 4.05% technical level in 10yr yields (a major inflection point on the way up in the first quarter of 2024).  That doesn’t mean rates can’t go higher ever again, but this show of support effectively ends the sharp, initial phase of negative momentum that can follow big events like Friday’s jobs report.  The baseline is sideways in a choppy range until we get the next compelling data.  Don’t expect any major favors from Thursday’s CPI.  Reasons for this are discussed in today’s MBS Live recap video.

Market Movement Recap

10:11 AM slightly weaker overnight with additional losses into 10am and modest bounce since then.  MBS down 3 ticks (.09) and 10yre up 1bp at 4.04

12:48 PM Back into positive territory with MBS unchanged and 10yr down 0.6bps at 4.024

03:40 PM Very flat in the PM hours.  MBS still unchanged and 10yr up 0.2bps at 4.032

Friday’s NFP gave the bond market a solid whack, sending yields quickly higher.  Momentum remained intact over the weekend and through Monday.  Overseas markets were more willing to try to push back in the overnight session on Tuesday morning, but a modest selling trend remains intact.  The good news is that the negative momentum is waning… probably.  The other good news is that this is occurring in the absence of significant economic data, meaning the market is finding its own support for technical reasons.  Today’s 3 year Treasury auction is not mission critical, nor are the several speeches from Fed officials.  The trading action itself remains the best indicator and in that regard, the bond market’s nearness to ‘unchanged’ this morning is a very good sign.

Here in Philadelphia and many other parts of the nation, the weather is autumnal. But that doesn’t matter for the thousands upon thousands of uninsured houses hit by Hurricane Helene, or those in Milton’s path in Florida. Cities like Asheville, NC, which are receiving the lion’s share of publicity from Helene but there are scores of other communities in the area that are equally, if not harder, hit. My son Robbie participated in the college national mountain bike championships in Beech Mountain, NC, which was hard hit, for example. There are resources for information and giving. In other areas, the inventory of houses for sale varies based on geography and price point. The top reason sellers are selling in 2024 is due to some sort of life event. According to Zillow’s latest seller report, 78% of homeowners who list their homes for sale are motivated to sell due to major life events, such as changes in family size or job relocations. Most sellers take 3-4 months to decide, with 48% seeking a new location and others wanting more space or a different layout. 66% consider renting out their home before ultimately selling, with younger sellers more likely to consider it. (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. After 5:45AM PT today hear an interview with Usherpa’s Chris Harrington on how companies can best enact change management and how vendors can differentiate themselves from one another.)

Mortgage rates spiked at their fastest pace in months on Friday following the jobs report and yesterday added insult to injury, making for a total increase of nearly 3/8ths of a percent (.375%) in the average lender’s top tier conventional 30yr fixed rate.   Moves of this size are rare, but less so when the market gets a big piece of surprising information after recently hitting a longer term high/low.  Those ingredients were in place this time around with prevailing rates close to the lowest levels in well over a year over the past few weeks and a shockingly strong jobs report.  The last similar example was in April of this year.  Instead of jobs data, it was an inflation report that did the damage back then, but there’s still a lesson to be gleaned.  Simply put, it wasn’t until the market received the next top tier economic report that rates began to move in the other direction.   In other words, while the worse may be over in terms of the rapid, upward movement, it will take new data to put compelling downward pressure on rates. Back in April the bond market was a bit more focused on inflation than jobs, but both were considered top tier reports.  At present, the market is much more focused on jobs, but inflation data could still have a moderate impact if it comes in far enough from forecasts.  The next CPI (consumer price index–the biggest market mover among inflation reports) comes in on Thursday morning.  

Total insured wind and flood losses are predicted to be between $10.5 billion and $17.5 billion, according to CoreLogic. Earlier estimates placed the cost of insured damages between $3 billion and $5 billion.

Quantitative tightening has helped to keep mortgage rates elevated, but new concerns over how it impacts market liquidity could lead the Fed to end the program.