The Department of Housing and Urban Development affiliate is adding data elements in line with a larger industry goal and advancing other promised initiatives.

Persistent Rally After Data. More Data Ahead

Wednesday ended up being almost exclusively about the Job Openings data in the morning.  Bonds were fairly flat before that and rallied sharply afterward.  Once the initial reaction ran its course (in mere minutes), the rest of the day was an uneventful drift in a rate-friendly direction.  Yields hit the 3pm close several bps under the 3.80% technical level in 10s, which makes this a bit of a “lead-off” to whatever extent you were planning on the 3.8-4.0 range remaining intact until Friday’s jobs report.   In other news, the yield curve uninverted at times–a fact that means nothing about the future even though you’ll certainly see claims to the contrary.

Econ Data / Events

Job Openings 

7.673m vs 8.100m f’cast
last mo revised to 7.91 from 8.18

Job Quits

3.277 vs 3.282m prev
(lower is better for bonds)

Market Movement Recap

10:08 AM modestly stronger overnight with additional gains after JOLTS data.  MBS up 6 ticks and 10yr down 4.7bps at 3.785

12:44 PM Sideways near best levels.  MBS up 6 ticks (.19).  10yr down 5 bps at 3.782

03:17 PM Best levels of the day with MBS up a quarter point and 10yr down 7bps at  3.763

Interest rates continued their slow decline last week while application volume is inching up almost as slowly. The Mortgage Bankers Association (MBA) reports a 1.6 percent increase in its seasonally adjusted Market Composite Index , a measure of mortgage loan application volume. On an unadjusted basis, the Index gained 0.2 percent over the prior week. Applications for home purchase financing took the lead, rising 3.0 percent on a seasonally adjusted basis and was up 1.0 percent before adjustment. The Purchase Index has now narrowed what was once a double-digit deficit to a -4.0 percent year-over-year gap. [purchaseappschart] The Refinance Index decreased 0.3 percent from the previous week and was 94 percent higher than the same week one year ago. Refinance applications made up 46.4 percent of the total, down from 46.6 percent the previous week. [refiappschart] “Most mortgage rates moved lower last week, with the 30-year fixed rate edging down slightly to 6.43 percent. Purchase applications increased more than 3 percent over the week and are inching closer to last year’s levels, with government purchase applications leading the increase,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “ Refinance applications were slightly down but continued to show strong annual gains as borrowers with higher rates have been refinancing to lower their monthly payments. Similar to purchase activity, refinance activity has picked up across the various loan types.” 

I don’t know what, exactly, separates irony, satire, or paradox. Whatever category this falls into, it’s a classic tale of biblical proportions. (Other disaster news below.) While we’re on seafaring vessels, some parties you remember, others not, but I’m sure that I’ve never been to a yacht party. But then again, I don’t work with title companies in the Washington DC area. Thank you to Ken S. who passed along this story about how four title companies doing business in D.C. will be paying $3.29 in penalties for operating an illegal kickback scheme. Of course, state and local governments (in this case, the District of Columbia) aren’t the only ones tuned in to kickbacks. The Consumer Finance Protection Bureau is also out there, watching: Recall its kickback fine announcement regarding Freedom Mortgage a year ago. (Today’s podcast is found here and this week’s is sponsored by Stavvy. Moving real estate beyond paper documents. Stavvy is the digital platform that helps real estate professionals grow their business and ditch the paper process. Book a demo today! Hear an interview with #1 YouTube realtor Jason Walter and originator Jim Black on building your business through authentic social media.) Lender and Broker Software, Services, and Loan Programs Tappable equity (i.e., the amount a homeowner can borrow against while keeping a 20% equity stake) has grown by 100% since late 2019*. Many homeowners are “locked in” to their homes due to high interest rates and they need extra money to cover living expenses. The time for lenders to prepare is now. While the valuation process can be one of the most time-consuming and costly parts of home equity loan origination, ICE’s automated valuation models (AVMs) and digital valuation solutions can help change that and increase your success and profits. Download the new eBook, How to grow a successful home equity lending business, today to learn how ICE’s solutions can help you quickly gain an advantage in today’s home equity lending market. *Source: ICE Mortgage Monitor

Market movement continues suggesting increased focus on labor-related economic data.  This morning’s JOLTS (job openings and labor turnover survey) is the latest example.  Job opening came in at the lowest level since early 2021, when they were rocketing higher from the lockdown lows a year earlier.  Present levels are still a bit higher than 2018, but the trend is bond-friendly.  Notably, this release corresponds with the last nonfarm payrolls report and not the one coming out in 2 days.  

Above: job openings almost back to highest pre-covid levels

Above: 10yr yields have been very well behaved regarding the 3.8 to 4.0 range that was established in early August, although the ceiling is arguably more like 3.93 to 3.95.

Mortgage rates moved lower for the 2nd straight day on Wednesday with the average lender right in line with their lowest levels since August 5th.  In fact, most borrowers would see little–if any difference between today’s loans quotes and those from August 5th.  As such, today’s rates basically match the lowest in well over a year. This is made possible by a series of economic reports that have “played nice” with the notion of the Fed cutting rates by at least 0.25% at the next meeting in 2 weeks.  The bond market (which includes bonds that drive daily changes in mortgage rates) is constantly adjusting to get in position for the Fed’s most likely course of action.  By the time the Fed actually cuts, most of the mortgage rate movement associated with that cut will have already happened. If economic data is important in determining the near-term momentum, the next two days are critical.  Tomorrow’s combination of Jobless Claims and the ISM Services index will set the tone early, but it will ultimately be Friday’s big jobs report that provides the best chance for clarity on the Fed’s rate cut plans.   Weaker jobs data would increase the odds of a 0.50% rate cut, and mortgage rates would drop in anticipation.  Conversely, a stronger-than-expected jobs report would solidify the case for a 0.25% cut, likely pushing mortgage rates a bit higher in the interim. There’s no way to know which direction things will go in the coming days, only that there is greater potential for the move to be bigger than those seen in recent days. 

In August’s roundup of top mortgage news: The Consumer Financial Protection Bureau sides with plaintiffs against Mr. Cooper in alleged “junk fee” lawsuit, updates to 203(k) and more.

Doug Duncan joined Fannie Mae in 2008 after holding the chief economist position at the Mortgage Bankers Association for almost 16 years.

The new exec is a former CEO of Sagent and Cloudvirga, and worked at Black Knight for over a decade.

Melody Taylor, the executive director of the Property Appraisal and Valuation Equity task force, said the interagency group went above and beyond expectations. She also defended it against common attacks from working appraisers.