Everyone’s above average, right? If you are a lender and making money, you’re in the majority. It’s not that you’re not special, it’s just that with cuts and servicing income, and unprofitable companies going away, most companies are in the black: In the first quarter, 59 percent off all mortgage banking companies were profitable per the MBA Performance Report, buy it for details. Is our government profitable? Of course not, almost regardless of Administration. The federal budget deficit is expected to swell to around $1.9 trillion this year, according to the Congressional Budget Office, which was higher than its previous estimate of $1.5 trillion. This takes into account increased spending for student loans and Medicaid as well as the recently passed $95 billion foreign aid package. National debt is even poised to top $56 trillion over the next 10 years, or 122 percent of GDP, surpassing the 106 percent seen in 1946 after World War II. Meanwhile, the eurozone is facing debt issues of its own, with the ECB warning eight of its members (including Belgium, France, and Italy) over their excessive budget deficits. Today’s podcast is found here and this week’s is sponsored by Candor. Candor’s authentic Expert System AI has powered more than 2 million flawless, hands off underwrites. Every credit risk decision Candor makes is backed by a warranty, eliminating repurchase worries. Hear an interview with FinLocker’s Brian Vieaux on bringing consumer permission data to property searches and originations.

Two major home price indexes had very different conclusions about the growth of annual home prices in April, but each showed a significant month-over-month uptick.  The S&P CoreLogic Case-Shiller U.S. National Home Price Index fell off its March pace while the Federal Housing Finance Agency’s (FHFA’s) Home Price Index (HPI) moved higher. Case-Shiller’s non-seasonally adjusted National Index April covering all nine U.S. census divisions, moved from 0.7 percent annual growth in March to a 0.2 percent decline in April. Both composite indexes increased on the rate of decline posted the previous month. The 10-City, which was down 0.7 percent on an annual basis the prior month lost 1.2 percent in April while the 20-City posted a 1.7 percent year-over-year loss, down from 1.1 percent in the previous month. Miami reported the highest 12-month gains among the 20 cities in April at 5.2 percent. Chicago debuted in the top three in second place with a 4.1 percent gain and Atlanta pushed Charlotte out of third place, increasing by 3.5 percent. Annual price changes were lower than the prior month in 17 of the 20 cities. Only Boston, San Francisco and Cleveland managed to increase their appreciation rate. Monthly changes were all positive. Before seasonal adjustment, the U.S. National Index posted a 1.3 percent month-over-month increase in April while the two composites were 1.7 percent higher. After seasonal adjustment, the National Index posted a month-over-month increase of 0.5 percent, while the 10-City and 20-City Composites gained 1.0 percent and 0.9 percent, respectively.  

But those in opposition are still giving the agency props for how it carried out the new product approval process for the first time.

Home price appreciation and favorable economic factors have led to consistent loan performance, but prepayments are increasing with an uptick in housing turnover, according to Morningstar DBRS.

The wholesale lender called the claims in the Hunterbrook-related class action “meritless” and an attempt to smear its reputation, in a recently filed motion to dismiss it.

The income needed to afford a typical apartment is the highest since 2022.

The Department of Justice filed an amicus brief in a case that also involves the National Association of Realtors and its rules around multiple listing services.

No Major Data, No Major Movement

It was a snoozer of a day for bonds with yields and MBS prices holding well inside last Friday’s ranges for the entirety.  An “inside day” isn’t much of a surprise when the calendar is completely empty in terms of major economic data.  In fact, it was devoid of all manner of economic data.  That left only a few Fed speeches and as is the recent norm, Fed speakers are all saying the same things (thus, no surprises for bonds). At the 3pm close, both Treasuries and MBS were perfectly unchanged. 

Market Movement Recap

09:59 AM Modestly weaker overnight but bouncing back to unchanged.  MBS unchanged and 10yr up 0.3bps at 4.256.

11:12 AM Treasuries slightly weaker with 10yr up 1.1bps at 4.264.  MBS up 1 tick (.03).

03:03 PM MBS and Treasuries both perfectly unchanged.  10yr at 4.253

“I saved a bunch of money on my car insurance by… switching to reverse and leaving the scene.” The word on the street is that Guaranteed Rate is changing its name to “Rate,” but of greater concern to lenders is insurance. Homeowner’s insurance costs are no joke, nor are insurance companies stopping business entirely in states and counties. If you have a current homeowner whose bill just went up by $500 per month, know that this is $500 a month that won’t be spent in the general economy buying meals, going to movies, going on vacation… Not only that, but LOs and AEs and capital markets staffs do their darndest to get the best rates for their clients, and saving $50 or $100 a month are a victory, only to have the deal blown out of the water by monthly insurance costs. Insurance, of course, is a state-level issue; certainly, the CFPB does not oversee it. Some state groups are doing something about it. For example, the California MBA would like to point to real-life examples of the consequences across California: Here is a link to a fillable form to enter any helpful information or examples.) Today’s podcast is found here and this week’s is sponsored by Candor. Candor’s authentic Expert System AI has powered more than 2 million flawless, hands off underwrites. Every credit risk decision Candor makes is backed by a warranty, eliminating repurchase worries. Hear an interview with Move Concierge’s Sajag Patel and Gabe Abshire on the home services set up industry. Software, Products, and Services for Lenders and Brokers

Most mortgage lenders offer mortgage rates in increments of 0.125% (i.e. 6.875, 7.0, 7.125, 7.25, etc.).  As such, a particularly notable day of mortgage rate movement is one in which we see close to a 0.125% change.  After all, that’s what it would take for the average borrower to see a significant change in the prevailing rate quote. This doesn’t mean smaller moves don’t hurt, only that they tend to impact implications for upfront costs rather than the quoted rate itself.  Specifically, last Monday, when rates jumped from 6.99% to 7.04%, the average borrower would be quoted a rate of 7.00% in both cases, but on the 7.04% day, closing costs would have been higher, all other things being equal.  With all of the above in mind, ever since last Monday, the average top tier conventional 30yr fixed rate hasn’t moved mover than 0.02% on any single day and for the past 3 days, not more than 0.01%.  That’s a staggering level of “sideways-ness.”  It hasn’t been for a lack of potential motivations either.  During that time, several economic reports were released that have managed to cause much bigger reactions in the past.  If they didn’t this time, it’s because the market is eagerly waiting for confirmation (or lack thereof) that the most recent round of inflation data is signaling a shift that allows rates to continue moving lower.   That data only comes out every so often, and only once a month in the case of the most important inflation report: the consumer price index (CPI).  We’re still several weeks away from that one, but some of the other data is up to the task of causing some volatility between now and then.  The only catch is that almost all of it arrives next week.