The program lapsing would preclude mortgage applicants from closing on home loans without the required coverage in federally designated flood zones.

The state, with the support of its Realtors, will be mandating that real estate salespeople have a contract with the home seekers they are representing.

The changes will help servicers expedite submission of necessary forms needed in credit reporting disputes.

Servicers have been concerned about prepayments and delinquencies picking up in a lower rate environment, and both have been notably higher in the short term.

Purchase activity trudged along during what lenders describe as a traditional end-of-summer slump.

Is it Time to Worry About Bond Market Losses?

Ever since Fed day, it seems the bond market only really knows how to  move in one direction (and it’s not the direction that most of us prefer, even if it’s necessary to maintain order in the universe). The post-Fed correction is arguably necessary, but the question is whether it says anything about the future.  Simply put: no.  The next major move for rates has been and continues to be all about economic data.  This correction has been a mild, temporary diversion–even if it continues for another week at the same pace.

Econ Data / Events

New Home Sales

716k vs 700k f’cast, 751k prev

5yr Treasury auction

right in line with expectations 

Market Movement Recap

09:39 AM Moderately weaker overnight, mostly in Europe.  MBS down an eighth and 10yr up 3.7bps at 3.766

10:32 AM More weakness after early recovery.  MBS down 6 ticks (.19) and 10yr up 4.7bps at 3.776

01:21 PM Slightly weaker after 5yr auction.  10yr up 5.2bps at 3.781.  MBS down a quarter point

03:57 PM Fresh lows for MBS, down 9 ticks (.28) on the day.  10yr up 5.7bps at 3.788

“My people skills are fine. It’s my tolerance for idiots that needs work.” Fortunately, in our business we have very, very few of those, and certainly none that I’ve seen recently. At the Nebraska Mortgage Association Annual Fall Conference, some of the discussion is about four years ago. “Remember the days we had rate locks up the wazoo?” (Yes, related to the ying yang, not to be confused with yin yang.) But the focus is definitely on what’s ahead. Judging from what I am hearing and seeing, at this event and others, the general industry mood is good. Not great, but good. Optimistic. Companies have “cut their way to prosperity.” Those companies who have kept servicing rights (and the income) are hopefully not relying any longer on that servicing income to survive but could manage from production profit. In other trends, the Agencies are widely known as not “liking” cash out refi products, so the non-Agency (read: DSCR/non-QM) investors have been only too happy to step into that role. And with the yield curve “un-inverting,” shorter term home loans, like 3-1, 5-1, or 7-1, are expected to increase in popularity. (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 attorney Jaime Kosofsky on the disconnect between hype and reality when it comes to electronic closings and remote online notarization.)

Mortgage rates hit their lowest levels in more than a year and a half last Tuesday as the bond market put the finishing touches on its preparation for the Fed announcement the following day.  Since then, rates have been drifting mostly higher with each passing day. As of this past Monday, the average lender was at the highest levels since November 10th and those levels were matched again this afternoon–i.e. technically the highest rates in more than 2 weeks.   While that may sounds a little unpleasant, apart from the past 2 weeks, these are still the lowest rates since February 2023, and still sharply lower versus the late 2023 highs or even the highs from just 2 months ago. In many ways, the big drop in rates heading into the middle of September was indeed all about the market getting in position for the Fed’s big policy shift.  The correction seen since then is understandable and it should run its course fairly soon. The only catch is that economic data has been and will continue to be a bigger driving force for rate momentum than the ebbs and flows surrounding Fed policy decisions.  After all, those Fed policy decisions are based on economic data anyway.   In that regard, the last two days of this week are the most important as they contain the most relevant economic data.  Beyond that, next week is on another level (the highest level, arguably) due to Friday’s jobs report–the hardest hitting monthly economic report of them all. 

The bond market is in a bit of a lull with any excess buying demand flowing to the shorter end of the yield curve.  Meanwhile, the long end has been drifting slightly higher in yield in a fairly consistent way.  Interruptions have only come courtesy of weak economic data or dovish Fed comments.  Without any Fed speakers or major econ reports on the calendar today, it’s unclear that we’ll find motivation for the sort of reversal seen after yesterday’s Consumer Confidence data.  The afternoon’s 5yr Treasury auction has some small chance to give yields a nudge, but auctions haven’t been big sources of inspiration recently.

While real estate agents have softened their opinions on the National Association of Realtors commission settlement, almost two-thirds remained opposed, a Clever RE survey found.