“Who was the first person that used technology? Moses. He had two tablets that were connected to the cloud.” Technology is a two-edged sword. On the one hand, having everything on your phone is easy… until you lose it. Or it is confiscated. Tempted to voluntarily hand your phone to the police? I have heard repeatedly, “Don’t!” And here’s why. Technology has led to the popularity of Zoom & Team calls, but most prefer in-person events and workshops. (STRATMOR, for example, is conducting a typically well-attended Consumer Direct Workshop in Dallas in November that focuses on the CD channel.) Companies that service mortgages have a tremendous amount of tech at their disposal. Given the granularity of the data that is out there now, more parties than ever before know which loans/borrowers are “in the money” versus “out of the money” in looking at refinance candidates. Whoever holds the servicing rights, arguably, is in the best position to slice and dice the data and contact the borrower, although the LO will have the personal relationship. (Today’s podcast is found here and this week’s is Sponsored by Silk Title Co. Silk is for lenders who have centralized operations, are tech driven, process oriented, focused on the borrower experience, standardized in their approach, and most importantly… collaborative. Listen to an interview with CNET Money’s Katherine Watt on a recent survey that found 40 percent of U.S. adults are pessimistic about mortgage rates becoming affordable by the end of 2024.)

“A slight upward turn reflects a modest improvement in housing affordability, primarily because mortgage rates descended to 6.5% in August,” NAR Chief Economist Lawrence Yun said in a prepared statement.

New single-family home sales decreased 4.7% last month to an annualized rate of 716,000 after rising at the fastest pace since early 2022, government data showed Wednesday.

The 13 largest homeowners insurance underwriters denied almost half of their climate-related claims last year, adding to property owner and mortgage servicer woes.

Affordability improved for a fourth straight month, but questions remain about whether recent trends will bring a significant number of buyers into the housing market.

Mortgage bankers feared a proposal related to lenders’ access to a major secondary market and related reporting was too harsh. They’re eyeing a redraft closely.

At the risk of tempting fate by discussing a leveling-off of the post-Fed correction again, the overnight session saw the most compelling case yet for the correction having run its course.  The evidence didn’t have as much to do with the outright level of gains in longer term yields as it did with the shape of yield curve trading over the past 2 days.  During that time, the curve hit a ceiling and held flat for the longest period of time post-Fed-meeting.

The improvement in yields was a bonus, but it was quickly counteracted by a stronger round of 8:30am econ data.

Last but not least, it’s important not to assume that the yield curve movement will mean one specific thing for longer term rates going forward.  The curve can widen/rise even as rates are coming down–something that it has done quite a bit over the past few months.  Either way, the evolution of the following chart would look least surprising if it continues to widen.

Because we created the industry’s first daily mortgage rate index based on actual lender rate sheets without any subjective distortions, and because the longest-standing mortgage rate index in the U.S. is a once-a-week survey with plenty subjective distortions and some quirky methodology, we often find ourselves pointing out what’s “real” on many Thursday afternoons (the weekly survey comes out on Thursdays).  In virtually every case we can remember, there have been quantifiable reasons for periodic discrepancies.  Today may be the first (and certainly the most striking) example of Freddie Mac’s weekly survey data simply not making any sense. Reason being: Freddie logged a DECREASE in rates this week.  Before proceeding, we should be clear what that means in the scope of Freddie’s methodology.  A “week,” in this case, refers to the 5 days starting each Thursday and ending each Wednesday.  As such, if today’s index is lower than last Thursday’s, it means that the average rate between September 19th and 25th was lower than the average rate between September 12th through 18th. Therein lies the problem.  Rates were quantifiably, clearly, and incontrovertibly higher–even if not significantly so.  Normally, when we apply Freddie’s same methodology to our own daily rate tracking, we can at least reconcile any directional discrepancies.  We’re not so worried about outright levels matching up because outright levels are not that important for mortgage rate indices (the CHANGE is important).

More Resilient Today, But It’s Still All About Data

The bond market is still searching for its identity in the wake of last week’s Fed announcement.  Monday and Tuesday saw relatively big volatility in the morning with calmer, stronger afternoons–something that fueled hopes that the post-Fed correction was over.  Wednesday saw overnight losses with more weakness throughout the day, thus suggesting the post-Fed correction could still be alive. Thursday had a bit of everything: gains overnight, early losses and a decent afternoon recovery.  The only constant has been the ability of relevant econ data to set the trading tone.

Econ Data / Events

Jobless Claims

218k vs 225k f’cast, 219k prev

Durable Goods

0.0 vs -2.6 f’cast, 9.8 prev

Core Durable Goods

0.2 vs 0.0 f’cast, -0.2 prev

GDP (Q2, revision)

3.0 vs 3.0 prev

Market Movement Recap

09:39 AM Stronger overnight, weaker after data and now back near unchanged.  

10:28 AM Back to weakest levels now.  10yr up 2.5bps at 3.81 and MBS down an eighth. 

01:31 PM modest friendly bounce just before and after the 7yr auction (not necessarily because of it). 10yr up 1.2bps at 3.797 and MBS unchanged. 

04:12 PM No major changes since the last update.  MBS down 1 tick (0.03) and 10yr up 1bp at 3.794

We’re all following Hurricane Helene and its impact on lives and housing stock in the news. Will Rogers famously said, “All I know is what I read in the newspapers.” (He also said, “Politics has got so expensive that it takes lots of money to even get beat with.”) I could say, “All I know is what I read in predictions.” iEmergent, a forecasting and advisory services firm for the financial services, mortgage and real estate industries, announced a downward revision of its 2024–2026 U.S. Mortgage Origination Forecast. “Updated to reflect ongoing economic conditions, iEmergent now expects lower-than-anticipated growth for the next two years, particularly in the purchase mortgage market, while refinance volumes are projected to rise due to a gradual decline in mortgage interest rates.” Meanwhile, I received a short, harsh prediction from someone keeping their finger on the pulse of mergers and acquisitions: “Those lenders that do not have servicing portfolios and are running low on cash are going to race to the bottom on rates, lose more money, and be closing their doors if they don’t sell.” (Today’s podcast is found here and this week’s is Sponsored by Silk Title Co. Silk is for lenders who have centralized operations, are tech driven, process oriented, focused on the borrower experience, standardized in their approach, and most importantly… collaborative. Listen to an interview with Silk Title’s Marc Trachtenberg on all things title, from how the process can be moved forward in the origination process, to the room for evolution, to what makes for a great title process, among other things.)