Today’s Jobless Claims report is for the week ending July 13th.  This is important because the establishment survey for the big jobs report (nonfarm payrolls) is conducted on the week that includes the 12th of the month.  In other words, if claims were elevated last week, the implications would more readily transfer to NFP.  Claims were elevated, coming in at 243k vs 230k forecast.  Normally, the strength in today’s Philly Fed Index would have offset the higher claims number, but extra relevance (as described above) helped the claims data punch above its weight.
The net effect is that bonds managed to push back against overnight weakness, despite some 2-way volatility immediately following the data.

Thursday’s mark the release of Freddie Mac’s weekly mortgage rate survey.  It’s the longest running and most widely cited measure of mortgage rates, but it’s not always the most accurate when it comes to tracking day to day changes. In today’s case, the survey showed a sharp drop from 6.89 to 6.77.  In actuality, the drop was a bit bigger than that, but it happened last week following Thursday’s Consumer Price Index (CPI).  Today’s rates are almost perfectly unchanged since the end of last week. At issue is Freddie’s methodology which reports a trailing 5 day average of rates each Thursday.  That means that neither Thursday nor Friday’s sharply lower rates made it into the calculation last week.  Instead, they’re in today’s number, and today’s mortgage rates won’t be counted until next Thursday.  Thanks to the extremely flat trend in rates so far this week, we can agree with Freddie that rates are currently near 6.8% for top tier conventional 30yr fixed scenarios and that these rates are the lowest seen in many months. [thirtyyearmortgagerates]

It’s not just Americans who can’t afford U.S. homes. International purchases of U.S. homes over the past year declined 36 percent to 54,300 properties ($42 billion), hitting a record low as foreign buyers balked at the dollar’s strength and a lack of available properties with owners continuing to cling to pandemic-era cheap mortgages. If those buyers are looking for somewhere affordable, maybe they should look at Detroit (MI), which has the most affordable housing as determined by median house price divided by median annual household income. The city is 10.4 times cheaper than in Santa Barbara (CA), the city with the least affordable housing. Or if they’d prefer to rent until rates drop, Flint (MI) has the highest rent-to-price ratio, which is 14.2 times higher than in Santa Monica (CA), the city with the lowest. By the time they are ready to submit a mortgage application, many in our industry are hoping that Senate Amendment 2358 (which includes the Homebuyers Privacy Protection Act of 2024) passes, curtailing the practice of firms seeking to confuse mortgage applicants by inundating them with phone calls, texts, or direct mail solicitations. Aka “trigger leads.” More on that below. (Today’s podcast is found here and is sponsored by Calque. Calque provides a binding backup offer on a borrower’s departing residence, which empowers lenders to provide a bridge-like experience with easier qualification and less risk. Today’s episode features an interview with Blue Sage’s Carmine Cacciavillani on building software platforms for the mortgage industry.)

The proposal would add reforms aimed at broadly prioritizing owner-occupant access and end the “test” or “demonstration” mode these sales have been in since 2002.

Acting Comptroller of the Currency Michael Hsu said the OCC will review its 2020 interpretation of preemption under the Dodd-Frank Act and explore more direct engagement, tailored federal regulation and supervision of nonbank fintechs.

For at least the fifth consecutive quarter, the Providence, Rhode Island, company increased its allowance for credit losses on general office loans, which continue to be a problem area for banks.

The system update planned for July 20 will allow users to have one login to access all their NMLS accounts, among other modernization initiatives.

The number of properties sold over the past year was the fewest since 2009, the National Association of Realtors said.

Is anyone else seeing those sensational, “yellow journalistic” headlines saying that real estate is plummeting? Think again. The American Enterprise Institute’s (AEI) latest housing market analysis echoes what NAR’s numbers show, Case-Shiller’s numbers show, and the FHFA’s numbers show: A notable 6.5 percent national annual appreciation rate, despite the backdrop of high mortgage rates. The Sun Belt states, like Florida and Texas, lead in home price gains. I’ll admit that it is hard to know what to believe, because yesterday we learned that the NAHB Housing Market Index fell again in July to the lowest level since last December. I have also heard that the combination of elevated mortgage rates and high home prices has pushed house builders to lower prices. That latest NAHB survey revealed that 31 percent of builders cut home prices to bolster sales in July, higher than June’s 29 percent. The nation needs more houses built, but there isn’t much incentive for builders to build them, and many borrowers are waiting for lower interest rates before purchasing. Fortunately, the overall housing market is much stronger than in 2008, given the tremendous equity that is out there. (Today’s podcast is found here and is sponsored by Calque. Calque provides a binding backup offer on a borrower’s departing residence, which empowers lenders to provide a bridge-like experience with easier qualification and less risk. Today’s episode features an interview with Barry Sturner and Richard Horn on the CFPB v. Townstone case.)

Despite an active calendar of events that had the potential to cause volatility, average mortgage rates managed to remain unchanged in the morning and to move slightly lower in the afternoon.  Last Thursday’s inflation data helped 30yr fixed rates drop to 5 month lows and there hasn’t been much movement since then. Technically, today’s rates aren’t quite back to Monday’s levels, but the average borrower would be seeing the same note rate in either case.  The only potential difference would be in terms of upfront costs and even that would be minor. While the economic data so far this week has failed to inspire major rate movement, the forthcoming data still presents some amount uncertainty.  Thursday brings weekly Jobless Claims data.  This typically doesn’t have a big influence, but there’s heightened focus on labor market reports right now because signs of labor market weakness would further tip the scales in favor of a Fed rate cut. The Fed is currently expected to cut rates for the first time this cycle in September.  There’s a very high bar for them to consider a July rate cut–almost certainly too high for any of the scheduled economic data to make a difference between now and then.  Nonetheless, the Fed Funds Rate doesn’t directly dictate day to day changes in other rates.  If the data increases the case for September’s cut or if it strengthens the case for additional cuts after that, we could still see a favorable response in the short term. Conversely, if the data improves, rates could undergo a modest correction as they wait for the next big jobs report in early August.