Lown’s resignation creates a second vacancy in the government-sponsored enterprises c-suite, as it is also looking for a new CEO.

Federal Reserve Chair Jerome Powell says crushing inflation is the most important thing the Fed can do to reduce costs in the housing market. Some economists and policy specialists say higher rates are not the only tool at its disposal.

A decline in interest rates during the first quarter drove a Freddie Mac indicator higher for the first time since mid-2023, while a leading investment firm announced a deal aimed at boosting originations for government-sponsored enterprise financing.

The term is open to interpretation and may refer to a broad range of real-estate finance activity. An “independent mortgage banker” has a narrower definition.

Proceeds could be used to support the company’s loan originations as well pay down existing debt coming due in the next three years.

Today saw the average conventional 30yr fixed rate rise ever so slightly for top tier scenarios.  Most lenders are still quoting those scenarios just under 7%.  Depending on the specific details of any given scenario, rates range from the mid 6’s all the way up to the mid 7’s.  Unlike each of the past two days, there weren’t any major flashpoints for the bonds that underlie mortgage rate movement today.  There were a few economic reports, but neither had a big impact on the market.  All in all: a very calm and boring day–especially compared to almost any other day since last Friday. From here, the market will wait for the next big ticket economic report: Tuesday’s Retail Sales.  There are a smattering of other reports next week, punctuated by a holiday closure on Wednesday for Juneteenth. The biggest, most significant movement likely still depends on the economic reports that we just saw and won’t see again for nearly a month.  It wouldn’t be a surprise to see a more sideways, slightly choppy trend between now and then.

Once More: What’s Up With MBS Underperformance?

The notion of MBS underperforming Treasuries is front and center today–not because that underperformance is especially large, but mainly because MBS were often in the red while Treasuries were in the green.  We have nothing new to add to yesterday’s similar discussion of MBS underperformance but have nonetheless attempted to add a few thoughts in today’s video. As for nuts and bolts, it was a boring day for bonds with modest gains for the long end of the yield curve (one major reason for MBS underperformance) and an uneventful, sideways grind in the afternoon.  

Econ Data / Events

Import Prices

-0.6 vs 0.0 f’cast, 0.6 prev

Export Prices

-0.4 vs 0.1 f’cast, 0.9 prev

Consumer Sentiment

65.6  vs 72.0 f’cast 69.1 prev
1yr inflation exp. unchanged 
5yr inflation exp. +0.1%

Market Movement Recap

08:58 AM stronger overnight, but giving up some gains in the past half hour.  MBS up 1 tick (.03) and 10yr down 2.7bps at 4.218

11:54 AM Choppy trading in a narrow range.  MBS underperforming with 5.5s down 1 tick (.03).  10yr yields are down 3bps at 4.215

03:14 PM Zero change from the last update and very little volatility between now and then.

The bond market has a lot on its mind after this past week of economic data and events.  Inflation quickly and increasingly looks like it may (finally) be turning the long-hoped-for corner.  Timely employment metrics raise questions about labor market softening and Fed speakers are so eager to avoid jumping the gun on rate cuts after the Q1 inflation surprise that traders may wonder if they’ve moved from one side of the center to the other. 
Nothing about today will change or inform any of that, it seems.  We might have hoped that Import Prices would add to the disinflationary vibes, but alas, bonds actually lost ground after that (though not necessarily because of it.  After Consumer Sentiment data also failed to inspire, it’s clear that bonds are checked out for the week and the trades coming in are occurring for reasons that are unrelated to today’s events.

“In Florida earlier this week we celebrated with a couple of adult beverages: Metamucil and Ensure.” Every state has its quirks, and every state is made fun of by those in other states. Human nature, right? Here in Chicago, the restaurant scene is on fire, but White Sox fans aren’t happy about the team having the worst record in the majors. While the nation’s fastest-growing cities continue to be in Sun Belt states, new population estimates show that some of the top gainers are now on the outskirts of metropolitan areas or in rural areas. For example, to the west of Chicago, Rockford has become one of the top real estate markets in the nation! And with a hot real estate market usually comes increased lending. What originator can’t learn from hearing another top producer, especially when they love what they do? Today The Mortgage Collaborative’s Rundown (noon PT) will feature Austin Lampson who was just highlighted as one of the top 5 female loan originators in the country in 2023 and have been in the top 1 percent of loan originators since 2014! (Today’s podcast is found here, and this week’s are sponsored by Richey May, a recognized leader in providing specialized advisory, audit, tax, cybersecurity, technology, and other services to the mortgage industry. Hear an interview with Loan Atlas’ Craig Strent on building your origination business based on non-Realtor referral sources.) Software, Products, and Services for Lenders and Brokers Transform your mortgage operations with Dragon9 Partners, a leading IT solutions firm with years of hands-on experience in mortgage origination, sales, and servicing. Whether you are a small, medium, or large Lender/Broker, our expert team understands the intricacies of the mortgage industry and is dedicated to delivering innovative technology solutions tailored to your needs. Whether you are looking to streamline your origination process, boost sales efficiency, or enhance servicing operations, we offer comprehensive IT consulting services to drive your success. Partner with us to leverage cutting-edge technology, improve customer satisfaction, and achieve operational excellence. Let Dragon9 be your trusted technology partner in navigating the complexities of the mortgage landscape. Contact us today to learn how we can help you achieve your goals. The first 3 responses will receive a free cybersecurity readiness assessment.

Borrowers still sought opportunities in the homebuilder market with activity trending upward for over a year, even as existing inventory showed signs of expanding.