Senator Elizabeth Warren and three Democratic colleagues urged Federal Reserve Chair Jerome Powell to lower interest rates to help bring down housing costs ahead of the central bank’s policy meeting this week.

In the wake of the Surfside condo collapse, Freddie Mac and Fannie Mae instituted stricter rules regarding the soundness of this crucial form of housing stock as it ages. In response to complaints about a lack of clarity on buildings deemed unfit for financing, the GSE unveiled plans to improve transparency for both home owners associations and lenders.

Mortgage rates are in the midst of a bit of a winning streak, but it’s about as small and as neutral as winning streaks get.  Today was the third day in a row where the top tier, conventional 30yr fixed rate was at least as good a the previous business day.  The catch is that there’s not much difference between today’s rates and the recent peak from 4 days ago.   There’s been a lot of momentum behind the notion that rates will continue to fall in early 2024 after dropping sharply in late 2023.  Instead, we’ve seen a classic, subdued correction off the longer-term lows from mid December.  The size and timing of the correction make great sense considering the size and timing of the big drop that preceded it. From here, the next thing that makes great sense is for rates to follow the guidance of the incoming economic data  first and foremost.  Comments from the Federal Reserve will be a supporting actor until the March Fed meeting.   In other words, we have a Fed meeting coming up in 2 days and we DON’T expect there to be any major fireworks.  This week’s only pyrotechnic potential comes in the form of several key economic reports in addition to the Treasury department’s update on its borrowing needs.  Treasury borrowing affects mortgage rates indirectly because it directly impacts the “supply” side of the supply/demand equation.  If Treasury doesn’t need to borrow as much, Treasury yields fall.  Lower Treasury yields correlate with lower mortgage rates, all other things being equal.

Solid Start But Data Dependent

Bonds started the day in slightly stronger territory with gains in both Asia and Europe overnight.  The bulk of the domestic session was flat and uneventful until the 3pm Treasury refunding update.  This isn’t the official announcement (that’s on Wednesday), but it offered a hint of what’s to come.  Specifically, estimated borrowing needs dropped more than $50 billion for the quarter–not an insignificant amount.  The bond market agreed with yields dropping immediately in response.  10s and MBS ended the day at the best levels in a week and a half. While that’s a nice little victory, where we go from here depends very much on the incoming econ data.

Market Movement Recap

10:15 AM Stronger overnight but bouncing now.  10yr still down 1.9bps at 4.12.  MBS up 2 ticks (.06).

02:16 PM Sideways all day with Treasuries outperforming modestly.  MBS up an eighth.  10yr down 4.2bps at 4.097.

03:09 PM Additional gains after TSY refunding notes.  10yr down 6.5bps at 4.047.  MBS up just under a quarter point after adjusting for illiquidity.

“Sometimes it takes me all day to get nothing done.” But things are always changing. When I was a kid I “got a drink of water.” Now kids “hydrate.” Really? A few years ago, a good originator could do 10-20 loans per month. Now, it is rumored that 80 percent of volume is being done by 40 percent of originators, and lenders have instituted minimum production numbers: “If you’re not funding 2 loans per month, we’re going to let you find success elsewhere.” Diving into 2023’s production via NMLS looking at 234,000 records, Ingenious found that only 24 percent of originators did 24 units or more! 30 percent did 18 or more units, 40 percent did 12 or more units, and 60 percent did 5 or more units. Has the “norm” changed? Certainly a portion of marketing has shifted to people under the age of 40s, and Mortgages with Millennials with Kristin Messerli and Robbie Chrisman talking about Overlooked Strategies to Win with Millennials tomorrow at 1PM ET. Today’s podcast can be found here and this week’s is sponsored by Calque. With The Trade-In Mortgage powered by Calque, lenders help their clients negotiate a lower purchase price, reduce their interest payments, and eliminate PMI. Hear an interview with Truv’s Richard Grieser on the latest verification solutions and how lenders can combat fraud. Lender and Broker Software, Products, and Services Introducing The 2024 Lender Playbook: 4 Tips to Drive Profitability in a Recovering Market. How will the coming election, housing inventory, and Fed action impact the mortgage market (and your lending success) this year? There’s a lot going on in 2024, and market recovery won’t be straightforward. The good news? You can still build a strong, forward-thinking plan for resilience and profitability. Tenured industry experts from Maxwell’s senior team helped create this guide to teach you how to reduce costs, win borrower business, and capture intermittent loan volume as it reemerges in the market. To get a leg up on the competition and build agility into your business, click here to download The 2024 Lender Playbook: 4 Tips to Drive Profitability in a Recovering Market.

Monday is the only day of the present week without any major scheduled economic data.  After that, it’s game on with the increasingly meaningful JOLTS data at 10am on Tuesday.  Wednesday’s headliner in the morning hours may turn out to be the Treasury refunding announcement, but the focus will unfortunately be on the Fed announcement in the afternoon.  Why unfortunate?  Because the Fed can’t really say anything we don’t already know.  We’re not yet at the point of Fed days yielding legitimate shifts in policy or even in the policy outlook (that was accomplished in the September and December meetings).  Then, of course, the biggest event of the week is Friday’s jobs report after an opening act from ISM Manufacturing on Thursday.
In terms of market movement, bonds are increasingly looking like they’ve accomplished the early 2024 correction that many analysts expected as a logical conclusion to the late 2023 rally.  last week saw the narrowest range of the year so far and no new highs for Treasury yields.  That’s potentially promising, but remember 2 things.  First, we had an even more compelling counterattack week 2 weeks ago. Second, the chart patterns don’t really matter if the data makes a compelling suggestion about the next move.

A little over 280,000 customers had their birth dates and Social Security numbers compromised during the cyber attack.

The National Association of Realtors’ index of contract signings increased 8.3% to 77.3 after holding at a record low a month earlier, according to data out Friday.

At the same time, the Hilltop Holdings unit expects its gain-on-sale margins to remain pressured in the coming year.

Purchases of new single-family homes increased 8% to a 664,000 annual pace last month, after an upward revision to November’s figure, government data showed Thursday.