Credit is certainly a topic as of late, both its process and its cost, but I received this note from an industry vet in the South. “Rob, I’m tired of lenders having ‘a come apart’ over FICO’s costs. No one talks about the fact that FICO held its prices steady for over 20 years, and the 1400 percent price increase came from a base of 69 cents. I don’t think FICO is running away from competition. Everyone is talking about ‘1B’ (one bureau), but the bigger issue is lender choice, where the lender or LO chooses which score they’re going to use. Not all the bureaus have the same data, and that opens the door to adverse selection, increased risk, and gaming, which all leads to increased costs to consumers.” While we’re talking credit, here in Florida at the Lenders One Summit, I spoke to a few people about what they were doing to try to save money, and a few of them mentioned FICO’s Direct License Program. (Today’s podcast can be found here and this week’s ‘casts are sponsored by Feewise, which turns mortgage compliance from bottleneck to business accelerator. Handle all the complexities involved with establishing TRID compliant fees and disclosures, achieve sign off, and deliver packages to your consumers for review or signature. Hear an interview with Depth’s Lindsey Neal on modern relationship management, marketing, and PR strategies in the mortgage industry.) Products, Services, and Software for Brokers and Lenders “Spring is the season for fresh starts… even better to have a fresh start at prime minus 0.25% margin start rate! Take advantage of Symmetry’s Concurrent or Post-Close Piggyback Special and give your borrowers a smart solution to help them move forward with confidence. This offer is available for borrowers with a 760+ mid FICO, a minimum $300K draw at closing, and up to 80% max CLTV on primary residence Piggyback HELOC transactions. It features a 5-year draw term, with a 10-year draw term available for a +0.25% margin add-on. Your borrower’s home has been working hard for them, and now it’s time to help them reach their financial goals. Symmetry Lending.”

Economic data is one of the few consistent sources of motivation for interest rates in the mortgage world and beyond. In general, stronger data tends to push rates higher and vice versa. But in today’s case, that correlation didn’t pan out. The first of today’s two important economic reports was ADP Employment. It was just barely stronger than expected, so it’s no surprise that rates didn’t react. The second report (ISM Services) was quite a bit stronger, with the headline index hitting its best levels since 2022.  On a vast majority of other occasions, such a result would create some clear upward pressure for rates. We can only speculate as to the absence of a reaction this time. Perhaps it was the component that tracks inflation falling to the lowest level in nearly a year. Perhaps the market is more preoccupied with geopolitical considerations.  Regardless of the reasons, we’re not upset with the outcome. Rates moved about halfway back down to their recent lows after spending a few days at 2 week highs to start the week.

In the initial aftermath of the conflict, the 10-year Treasury rose by 10 basis points over a two-day period, pushing mortgage rates back above the 6% level.

The government-sponsored enterprises’ oversight chief severed ties with the AI firm following President Trump’s dispute with it over boundaries on military use.

Mutual of Omaha, Finance of America and Longbridge Financial rank at the top of HECM endorsements over the past 12 months, Reverse Market Insight reported.

The housing supply gap hit an estimated 4.03 million, an increase from 3.8 million in 2024, as new construction fell short again, according to Realtor.com.

Applications for renovation financing in 2024 were more abundant in some of the nation’s smaller counties and states, than in the largest housing markets.

At the L1 Summit, technology is obviously a key segment of many sessions. Tech is helping larger companies in their moves in controlling the borrower funnel. Artificial intelligence (AI) with its pros and cons but hoped-for benefits to productivity and therefore cost reduction, is a common conversation topic. Third party provider offerings are also theme. especially when it comes to technology and marketing. “Rob, I know that you have job ads in your Commentary, but we’re looking for a CRM that works well with lenders. Can you recommend someone?” In our Marketplace we have Total Expert, Volly, Insellerate, Usherpa, MortgageHalo, OptifiNow. Data mining is not new. Trivia experts know that many years ago there was a conspiracy belief that Baskin-Robbins, which recently turned 80 and gives away a free scoop to people on the BR birthday list celebrating their birthday, sold its birthday list to the U.S. Government’s selective service for draft purposes. That was not true. Many decades ago the Selective Service did, however, use Farrell’s birthday list which, when this was found out, quickly came to an end. (Today’s podcast can be found here and this week’s ‘casts are sponsored by Feewise, which turns mortgage compliance from bottleneck to business accelerator. Handle all the complexities involved with establishing TRID compliant fees and disclosures, achieve sign off, and deliver packages to your consumers for review or signature. Hear an interview with ACES Quality Management’s Sharon Reichhardt on improving productivity and mortgage loan quality while controlling costs and risk.)

After spending the entirety of last week calmy holding the lowest levels in more than 3 years, mortgage rates jumped sharply higher yesterday. That said, everything’s relative. Even after that “sharp” increase, the average rate was still one of the lowest in years apart from last week. There was slightly more cause for concern this morning as the underlying bond market increasingly swooned.  When bonds lost ground, rates move higher.  But unlike yesterday, which involved pervasive gradual weakness throughout, today saw a meaningful recovery shortly after the market opened. Bonds ended up making it almost all the way back to ‘unchanged,’ thus allowing most lenders to reissue revised rates that were slightly lower than this morning. The average lender didn’t make it quite back to yesterday’s latest levels, but the market movement offered an important proof of concept. Specifically, we’re not necessarily destined to see a runaway rate spike in the coming days. As always, there’s an important caveat: we’re not necessarily destined to see anything at all when it comes to the future of rate movement.  Depending on the outcome of economic data, rates could continue higher or recover back toward recent lows. Geopolitical developments can continue adding volatility for better or worse.  If there’s one take away, it’s simply that volatility risks are much more pronounced this week compared to the past 2 weeks. 

Bonds Erase Most of The AM Losses

The bond market was visibly pulled in two directions on Tuesday. This played out in phases, with AM weakness followed by a gradual recovery. But it can also be assumed to be playing out at any given moment as bonds listen to the voices arguing in their own mind. One voice says yields need to go higher due to inflation expectations and Treasury issuance implications.  The other says that Treasuries are still a global safe haven amid geopolitical uncertainty (and, to a lesser extent, that the sell-off through 9am this morning may have been a tad overdone).  Looking at stocks vs bonds, it does indeed look like yesterday was more about inflation fears and new-month positioning while today was a risk-off move that started at the 9:30am NYSE open. 

Market Movement Recap

08:48 AM Another overnight session with heavy selling. 10yr up 6.4bps at 4.099 and MBS down 9 ticks (.28).

10:58 AM decent recovery in 10am hour. MBS down less than a quarter point now and 10yr up only 3.3bps at 4.069

01:39 PM Recovery continues. MBS down only an eighth and 10yr up 1.6bps at 4.052

04:13 PM Off best levels heading into the close. MBS down 5 ticks (.16) and 10yr up 2.6bps at 4.062