Lower interest rates allowed mortgage activity to rise modestly during the week ended May 3. It was the first increase in three weeks. The Mortgage Bankers Association said its Market Composite Index, a measure of the volume of mortgage applications, rose 2.0 percent on a seasonally adjusted basis compared to the prior week and 3.0 percent before adjustment. The Refinance Index increased 5.0 percent from the prior week but was 6.0 percent lower than the same week one year ago. The refinance share of mortgage activity increased to 30.6 percent of total applications from 30.2 percent the week before. [refiappschart] The Purchase Index ticked up 2.0 percent on both an adjusted and unadjusted basis but was still 17.0 percent lower than the same week in 2023. [purchaseappschart] “Treasury rates and mortgage rates fell last week on the news of a slowing job market, with wage growth at the slowest pace since 2021, and the Federal Reserve’s announced plans to ease quantitative tightening in June and to maintain its view that another rate hike is unlikely. The conventional 30-year rate dropped 11 basis points, and the FHA rate fell 17 basis points to 6.92 percent, back below 7 percent for the first time in three weeks,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Mortgage applications increased for the first time in three weeks, with refinances up 5.0 percent. Even with the increase, which included a 29 percent jump in VA refinances, refinance application volume remains about 6 percent below last year’s already low levels.”

While the company made headway in reducing operational costs, it incurred several million dollars worth of expenses as it dealt with the January incident.

The rightsizing measures impacted workers in Colorado and Florida who worked at acquired Computershare Mortgage Services and its affiliate Specialized Loan Servicing.

The process of making changes to foreclosure prevention programs has been complicated by differences in how the Department of Veterans Affairs operates compared to an agency like the Federal Housing Administration.

Former Angel Oak Lending Chief Marketing Officer Steven Winokur has come back into the non-qualified mortgage business by taking a marketing role at Carrington Mortgage Services.

The Federal Open Market Committee thinks that confusing everyone completely is good for confidence, that intangible but entirely necessary ingredient for financial stability, writes the Chairman of Whalen Global Advisors.

Strong in The AM, Weaker in The PM

Bonds improved fairly steadily in the AM hours.  After an initial glut of buying demand in the first hour of trading, there was a linear trend channel to the best level of the day right at noon ET.  After that, a similarly linear trend took bonds back toward (but not into) weaker territory.  None of the above occurred outside a range that we’d consider anything other than uneventful.  Overseas data and trading likely helped play a role in the ebb and flow.  The 3yr Treasury auction didn’t have a big impact, but concession-building for tomorrow’s 10yr auction could have contributed to the afternoon weakness. 

Market Movement Recap

09:31 AM modestly stronger overnight with better buying after the 8:20am CME open.  MBS up 5 ticks (.16) and 10yr down 4bps at 4.445

11:44 AM Best levels of the day with MBS up 6 ticks (.19) and 10yr down 6bps at 4.425

01:54 PM No major reaction to 3yr auction.  MBS still up 6 ticks (.19).  10yr down 4.1bps at 4.445

02:43 PM steady weakness in the PM hours, but still stronger on the day. UMBS 6.0 still up 6 ticks (.19), but down an eighth from the highs.  10yr still down 2.8bps at 4.458 but up almost 4bps from lows.

04:04 PM Modest bounce keeps bonds safely green in the final hour.  MBS up 6 ticks (.19) and 10yr down 3.3bps at 4.454

Lynyrd Skynyrd sang, “Sweet home, Alabama, where the skies are so blue…” Through the wonders of airship transportation, today I’m off to Alabama. The skies won’t be blue all the time with some rain in the forecast, but that won’t stop attendees at the conference learning about reigning in credit costs, why rates are doing what they’re doing, and artificial intelligence. I am sure that some of the talk will involve politics and bureaucracy, speaking of which, here’s an opinion about the CFPB: Why does one unelected bureaucrat get to decide credit card fees? There’s also the servicing angle: Our biz is concerned about how the Consumer Financial Protection Bureau’s latest supervisory highlights may impact borrowers’ trust in their mortgage service providers, specifically Regulation X, Regulation Z, unfair, deceptive, and abusive acts or practices, and what the bureau deems as “junk fees.” (Found here, this week’s podcasts are sponsored by Matic, the digital insurance marketplace built for the mortgage industry. Matic integrates home insurance shopping into the lending and servicing experience, allowing customers to shop carriers and find a policy in minutes. Create a new revenue stream that boosts customer happiness today! Hear an interview with the MBA’s Joel Kan on all the latest trends across the mortgage industry, from profitability and predictions to margins and volatility.) Lender and Broker Software and Services Exclusive for ICE Mortgage Technology’s customers, the best and most valuable sessions from ICE Experience 2024 are now at your fingertips, online and free now through May 31. Log in to view everything from inspiring keynotes and compelling fireside chats to popular breakout sessions and panel discussions. This content is only available for a limited time, so start watching now to catch all the sessions most important to you before they are gone. Register here for access.

There have been 3 winning streaks for mortgage rates in 2024 where the average rate has moved lower for at least 5 days and where the conventional 30yr fixed rate has fallen by more than 0.25%.  Before today, there were only two.   The present example didn’t receive a notable boost from its 5th consecutive day of improvement, and that improvement wasn’t readily linked to any obvious root cause in terms of data, news, or events.  In some ways, the bond market’s friendly momentum from last week was simply still running its course due to overseas holiday calendars. Specifically, European markets were closed yesterday.  That means they had yet to trade their reaction to Friday’s jobs report in the US.  Naturally, Europe is a different continent, and US rates care more about US markets.  But there is always some correlation and spillover between the world’s major bond markets with gains in Europe often coinciding with gains in the US.  In terms of MND’s daily index, conventional 30yr fixed rates are back under 7.25% for top tier scenarios after being just over 7.5% last week.

The theme of “waiting” amid an empty calendar will be played out by the end of the week (if it’s not already played out from most of the past year spent waiting for only a handful of key events each month). Despite a few scattered events on today’s calendar, none of them are worth any significant potential volatility for bonds.  Without big ticket data, other considerations become a bit more visible in terms of their impact on trading levels.  In today’s case, it’s the return of European markets after a 3 day weekend.  Weaker PMI data in Europe helped bonds overnight and US traders have added to the gains in the first few hours.

In the slightly bigger picture, however, we see that it requires a microscope to draw any conclusions from this morning’s movement and its relationship to the present trend.

Also recall yesterday’s commentary regarding the range set by the April 10th CPI reaction, and the assertion that this would be a logical place to wait for the next CPI release.  Against this backdrop, this morning’s moderate improvement only brings bonds closer to the center of that range.