Known by his nickname Buz, John Gorman helped the Conference of State Bank Supervisors launch its nationwide cooperative agreement in 2006 and the National Multistate Licensing System for mortgage lenders two years later.

Views on mortgage rates and job security outweigh the pessimism about affordability and the economy, Fannie Mae found.

Mortgage rates are based on trading in the bond market.  As we saw last week, trading in the bond market can often be very exciting, even if that excitement isn’t always pleasant.  A rapid deterioration in bonds led to a rapid increase in rates. Other times, bonds can phone it in and skate by without making any serious commitment in either direction.  That’s the best way to describe today’s movement.  With one brief exception this morning, trading levels stayed well inside the range set yesterday (and yesterday’s range was already vastly calmer than the previous day). If rates are based on bonds and if we’ve just confirmed a boring day for bonds, it’s no surprise to find that it was a boring day for rates as well.  The average lender remained right in line with yesterday’s mid-day levels, although there were outliers who changed their offerings a few times between now and then. Traders continue waiting for actionable data.  That was in light supply today and tomorrow won’t be much better.  Drama can always unfold for reasons that transcend the event calendar, but if it’s not on the calendar, it’s hard to discuss those prospects.   What we do know is that a key inflation report is on the calendar next Tuesday morning.  It would not be a surprise to see rates continue attempting to hunker down until then.  This doesn’t mean a complete absence of day-to-day movement–simply more muted movement than what we saw during the recent spike.

When this commentary gig gets old, I think I’ll take up… throwing needles? But so far so good, putting this out six days a week. Yesterday I glanced at the calendar, and we’re 10 percent of the way through 2024 already! Still raining here in Northern California, and the flooding has caused a lot of concern in the mortgage industry, especially among companies servicing loans on any houses that are damaged, as well as owners of MBS with loans in them on any potentially damaged homes. At least the days are seeing more sunlight in the Northern Hemisphere. Daylight Savings kicks in on Sunday, March 10, just a little over a month away, and goes on until November. (Hawai’i, American Samoa, Guam, Puerto Rico, the U.S. Virgin Islands, and most of Arizona blow off this clock changing stuff.) Today’s Commentary podcast can be found here and this week’s is sponsored by Vesta, the new, modern Loan Origination System (LOS) which helps lenders reduce their costs to originate and improve their ability to integrate with new technologies in the ecosystem. Hear an interview with Vesta’s Mike Yu on LOS innovations and market demands for technology in a digitized space. Lender and Broker Software, Products, and Services Fair Lending: Get Ready for 2024! Fair Lending enforcement actions are at an all-time high and fair lending litigation is on the rise. Meanwhile, there’s been a slew of new guidance on AI, appraisal bias, immigration status, and other areas. In this latest webinar, Ncontracts discusses what financial institutions need to know about Fair Lending in 2024, including where regulators are focusing scrutiny, what new guidance means for your Fair Lending program, how Fair Lending has evolved over the past year, and how to prepare your lending compliance management program for 2024. Watch the full webinar for more.

Fed Speakers on Repeat as Bonds Hit Snooze

After several days of heavy volatility, the bond market is drifting into a sideways daze, lulled to sleep by the repetitive tones from multiple Fed speakers.  One after another, they’re saying the same version of the same thesis (good progress on inflation, but need more, might cut in 2024, but not yet, surprisingly strong econ gives us time to decide, etc). Bonds have clearly heard it all before, which is why they didn’t care about Powell saying this stuff last week.  NYCB headlines were worth temporary volatility, but not lasting changes.  The  largest ever 10yr auction passed without a trace.

Market Movement Recap

09:11 AM Initially stronger overnight on NYCB downgrade, but steadily weaker into domestic hours.  Pushing back modestly now with MBS down 3 ticks (.09) and 10yr yields up 1.8bps at 4.108.

09:47 AM 10yr yields are quickly down a a few bps at 4.073 after new NYCB headlines.  MBS up 2 ticks (.06).

11:46 AM NYCB gains erased fairly quickly. 10yr now back to 2bps to 4.11.  MBS down 3 ticks.

01:05 PM Uneventful 10yr auction.  10s up 2bps at 4.11.  MBS down 6 ticks (.19) on the day in 5.5 coupons.

02:26 PM 10yr unchanged from previous update.  MBS tightening up a bit, now down only 3 ticks (.09).

04:42 PM Weakest levels of the day with MBS down a quarter point moments ago.  10yr up 2.7bps at 4.117

After rising roughly 2bps yesterday afternoon, bond yields dropped just over 2bps right at the start of the overnight session with buzz surrounding Moody’s downgrade of NYCB.  The energy behind the rally was tepid, at best, which may have been our first clue that overnight trading makes no guarantees. NYCB would go on to rally sharply in pre-market trading with traders ostensibly focusing on a leadership change as well as comments regarding an absence of big withdrawal flows.  With that, the fuel for the overnight bond rally evaporated and bonds pushed modestly into weaker territory.  From here, the focus is on the 1pm auction of 10yr Treasuries–the largest ever.  

Mortgage application volume rose modestly during the week as mortgage rates marked time.  The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage loan application volume, increased 3.7 percent on a seasonally adjusted basis compared to the previous period, a week in which the data contained an adjustment to account for the MLK holiday.  On an unadjusted basis, the Index increased 8.0 percent week-over-week.   The Refinance Index gained 12.0 percent from the previous week and was 1.0 percent higher than the same week in 2023. Refinancing accounted for 35.4 percent of the week’s volume, up from 34.2 percent the previous week. [refiappschart] The seasonally adjusted Purchase Index ticked down 1.0 percent and was 6.0 percent higher before adjustment. Volume was 19 percent below its level during the same week one year ago. [purchaseappschart] “Mortgage rates have stayed close to where they started the year, despite swings in Treasury yields because of slowing inflation offset by stronger than expected readings on the job market. The 30-year fixed mortgage rate was 6.8 percent, a slight increase from last week,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Rates at these levels have not prompted much of a reaction in the refinance market, as most homeowners have mortgages with much lower rates. However, purchase activity has been strong to start 2024 compared to the final quarter of 2023. However, activity is still weaker than a year ago because of low housing supply.”

A look at Home Mortgage Disclosure Act data of similarly situated conforming applicants also finds some lenders’ own comments for the rejection doesn’t match up with the reason given, the Federal Reserve Bank of Minneapolis said.

The majority of users are looking for new credit lines and others want to improve their scores. Credit monitoring by consumers may be a good indicator of both, Transunion found.

The Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency Tuesday issued the first in a series of requests for comment on all aspects of the regulatory apparatus as part of a required decennial review.